In this article specific hypotheses on the shape of a rational agent’s risk preference function are derived from psychophysical laws. Weber’s law is used to establish the hypothesis of constant relative risk aversion for a myopic expected-utility maximizer. Weber’s law. Fechner’s law and...

This paper deals with taxation in a framework which is a synthesis between the neoclassical growth model, augmented by a (separable) sector of resource-extracting firms, and the Fisherian intertemporal general equilibrium model: market forces bring about the neoclassical optimal growth path...

The paper advances the hypothesis that the ’gross wealth’ von Neumann/Morgenstern utility function is characterized by a horizontal branch for wealth levels below the socially guaranteed minimum wealth and analyses the implications of this property for human wealth and liability insurance....