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Expected utility theory (EUT) is currently the standard framework which formally defines rational decision-making under risky conditions. EUT uses a theoretical device called von Neumann-Morgenstern utility function, where concepts of function and random variable are employed in their...
Persistent link: https://www.econbiz.de/10012520657
With this research, we contribute to the study of ambiguity by analyzing how it can be handled in a rational, objective manner across the main strategic decision-making contexts that entrepreneurs and organizations face. Differentiating from most previous managerial and entrepreneurial studies,...
Persistent link: https://www.econbiz.de/10013395976
among investors in their cognitive dimensions, which, in turn, can develop their risk-bearing potential to reach the optimum … level so that emotionally broken investors can use their cognitive abilities with their developed risk-absorption potential … to further invest in the market in the near future. This study investigates the mediating effect of risk …
Persistent link: https://www.econbiz.de/10013041002
We study risky inter-temporal choice in a large random student sample (n=721) and a large rural sample (n=835) in Malawi. All respondents were exposed to the same 20 Multiple Choice Lists with a rapid elicitation method that facilitated the identification of near-future Certainty Equivalents of...
Persistent link: https://www.econbiz.de/10014581476
Persistent link: https://www.econbiz.de/10014232583
Our understanding of risk preferences can be sharpened by considering their evolutionary basis. The existing literature … has focused on two sources of risk: idiosyncratic risk and aggregate risk. We introduce a new source of risk, heritable … risk, in which there is a positive correlation between the fitness of a newborn agent and the fitness of her parent …
Persistent link: https://www.econbiz.de/10012587359
Choosing solutions under risk and uncertainty requires the consideration of several factors. One of the main factors in … choosing a solution is modeling the decision maker's attitude to risk. The expected utility theory was the first approach that … allowed to correctly model various nuances of the attitude to risk. Further research in this area has led to the emergence of …
Persistent link: https://www.econbiz.de/10012508716
in time. We show that in each problem, all risk-averse decision makers have the same (problem-dependent) ranking over … short-term risky assets. Moreover, in each problem, the ranking is represented by the same risk index as in the case of CARA …
Persistent link: https://www.econbiz.de/10012308696
Making financial decisions under risk and uncertainty has become part of everyday life. Traditional finance explores … the objective side of risk, analysing the decisions made by perfectly rational individuals in efficient market conditions …. The paper presents the risk component of financial and investment decisions from behaviour finance view point. In addition …
Persistent link: https://www.econbiz.de/10014530307
Dual risk models are popular for modeling a venture capital or high-tech company, for which the running cost is … deterministic and the profits arrive stochastically over time. Most of the existing literature on dual risk models concentrates on … development for the dual risk models to minimize the ruin probability of the underlying company. We will also study the …
Persistent link: https://www.econbiz.de/10014245631