We investigate the evaluation of known (where probability is known) and unknown (where probability is unknown) bets in comparative and non-comparative contexts. A series of experiments support the finding that ambiguity avoidance persists in both comparative and non-comparative conditions. The...

We examine the effects of background mortality and financial risks on an individual's willingness to pay to reduce his mortality risk (the value of statistical life or VSL). Under reasonable assumptions about risk aversion and prudence with respect to wealth in the event of survival and with...

We propose a theory that relates perceived evidence to numerical probability judgment. The most successful prior account of this relation is Support Theory, advanced in Tversky and Koehler (1994). Support Theory, however, implies additive probability estimates for binary partitions. In contrast,...

This article presents the results of a contingent valuation study from Sweden aimed at estimating the value of a statistical life (VOSL) in road traffic safety. Data on respondents' own subjective risk was collected by use of visual aids presented in a mail questionnaire. The relationship...

This article analyzes the implications of basic lottery tests for the probability weighting function w(p). We first show that the w(p) function with one argument cannot accommodate three basic tests of lottery choice. We also discuss in detail the links between the w(p) function with one...

This paper summarizes and synthesizes recent developments in the state-contingent theory of production under uncertainty presented by Chambers and Quiggin (2000) with a particular focus on the case of generalized expected utility preferences. The problem of the risk-averse firm under price and...

"Blessed is he who expects nothing, for he shall never be disappointed"--Benjamin Franklin. Based on our risk-value framework, this paper presents extensions for the disappointment models that were originally proposed by Bell (1985) and Loomes and Sugden (1986). We provide explicit functional...

We report a surprising property of mu-sigma-preferences: the assumption of nonincreasing relative risk aversion implies the optimal portfolio being riskless. We discuss a solution of that paradox using wealth dependent utility functions in detail. Using the revealed preference theory we show...

We investigate the validity of contingent valuation (CV) estimates of the value per statistical life (VSL). We test for sensitivity of estimated willingness to pay (WTP) to the magnitude of mortality-risk reduction and for the theoretically predicted proportionality of WTP to risk reduction...

This paper explores how people process information on low probability-high consequence negative events and what it will take to get individuals to be sensitive to the likelihood of these types of accidents or disasters. In a set of experiments, information is presented to individuals on the...