Psychological experiments have established that the classical expected utility model appears descriptively inadequate. Viscusi's prospective reference theory attempts to reconcile the expected utility model with many of these experiments by supposing that individuals have prior expectations...

In multidimensional bargaining situations where individuals possess relevant private information, say about preferences, allocational efficiency is a central concern. Even if there is no squabbling over distribution--for example, if contingent commitments on allocations can be made before...

This study provides an empirical perspective on the effect of ambiguous environmental risk information on lottery preferences using a sample of 646 adults. The learning process follows a Bayesian expected utility model in terms of the overall magnitude and sign of the weights that respondents...

The theory of propitious selection suggests that there are risk-avoiding personalities who both take physical precautions and buy financial security (insurance). Conversely, there are risk seekers who tend to do neither. Survey evidence is presented that is consistent with the theory....

This article gives a preference-based characterization of subjective expected utility for the general equilibrium model with a finite number of states. The characterization follows L. Savage (1954) as closely as possible but has to abandon his axiom (P6), atomlessness of events, since this...

In subjective expected utility (SEU), the decision weights people attach to events are their beliefs about the likelihood of events. Much empirical evidence, inspired by Ellsberg (1961) and others, shows that people prefer to bet on events they know more about, even when their beliefs are held...

Models of asymmetric information in insurance markets typically consider insurance buyers with Bernoulli loss distributions differing in expected loss. This article analyzes markets where buyer loss distributions are characterized by mean-preserving spreads and insurers can classify applicants...

This article examines the effect of familiarity with chronic lung disease on people's willingness to pay to reduce their risk of contracting chronic bronchitis, and on their willingness to increase their risk of auto death to reduce chronic bronchitis risk. The authors find that persons who have...

Insurance-industry accounts of the liability insurance crisis of the mid-1980s often cite disruption of supply in reinsurance markets as an important contributing factor. Economic theories of the crisis have not explored this explanation for the severity of the crisis. This article investigates...

This article discusses several technical and conceptual issues relating to the regulation of All-Terrain Vehicles (ATVs). Qualitative response models are used.to analyze a survey of injured persons and a survey of the general population of users. Because the latter did not distinguish injured...