The “surprise value” of many economic observations makes our discipline quite interesting for many students. One such anomaly is that providing “free” education in an effort to reduce the number of dropouts can often result in a lower level of educational quality purchased. This result...

We derive a mapping between the shortfall-minimizing portfolio selection based on higher order entropy measures and expected utility theory. We show that the family of HARA utility functions has a minimum-divergence, shortfall-based representation. This facilitates an interpretation in which the...

We prove a formula for the computation of optimal financial investments in an expected utility framework with arbitrary (not necessarily concave) utility functions. This extends classical results on optimal financial investments for strictly concave utility functions and is of importance...

In Financial Mathematics, the theory of enlargement of filtrations has been applied to modelling insider trading on stock markets as well as to the informational asymmetry on electricity markets. Still, when it comes to calculating the utility of market agents in either of these additional...

This note reconsiders the classical problem of precautionary saving in the presence of an interest-rate risk, and provides a new interpretation of the threshold of 2 for the relative prudence index, which characterizes the necessary and sufficient condition for precautionary saving

From Project economics prospective, EE options are seen as"no regrets" policies, since their net financial cost can be negative, i.e., the measures are justified purely on high financial returns. The justifiable factor is aligning programs to behavioral attitudes for utility's financial...