Risk Aversion as Attitude towards Probabilities: A Paradox

Theories of decision under risk that challenge expected utility theory model risk attitudes at least partly with transformation of probabilities. We explain how attributing risk aversion (partly or wholly) to attitude towards probabilities, can produce extreme probability distortions that imply paradoxical risk aversion.

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Year of publication:	2011-06
Authors:	Cox, James C. ; Sadiraj, Vjollca
Institutions:	Department of Economics, Andrew Young School of Policy Studies
Subject:	risk aversion \| probability transformation \| calibration \| reference dependence \| loss aversion

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Extent:	application/pdf
Series:	Experimental Economics Center Working Paper Series.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 2011-10 2 pages long
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009144526