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Manipulating Reliance on Intuition Reduces Risk and Ambiguity Aversion.

Butler, Jeff; Guiso, Luigi; Jappelli, Tullio - C.E.P.R. Discussion Papers - 2013

Prior research suggests that those who rely on intuition rather than effortful reasoning when making decisions are less averse to risk and ambiguity. The evidence is largely correlational, however, leaving open the question of the direction of causality. In this paper, we present experimental...

Persistent link: https://www.econbiz.de/10011083555

The role of intuition and reasoning in driving aversion to risk and ambiguity

Butler, Jeff; Guiso, Luigi; Jappelli, Tullio - C.E.P.R. Discussion Papers - 2011

Using a large sample of retail investors as well as experimental data we find that risk and ambiguity aversion are positively correlated. We show the common link is decision style: intuitive thinkers tolerate more risk and ambiguity than effortful reasoners. One interpretation is that intuitive...

Persistent link: https://www.econbiz.de/10008915807

Model Misspecification and Under-Diversification

Uppal, Raman; Wang, Tan - C.E.P.R. Discussion Papers - 2002

In this Paper we develop a model of intertemporal portfolio choice where an investor accounts explicitly for the possibility of model misspecification. This work is motivated by the difficulty in estimating precisely the probability law for asset returns. Our contribution is to develop a...

Persistent link: https://www.econbiz.de/10005504745

Pill, Patch or Shot? Subjective Expectations and Birth Control Choice

Delavande, Adeline - C.E.P.R. Discussion Papers - 2005

When choosing a contraception method, women base their decisions on their subjective expectations about the realizations of method-related outcomes. Examples of such outcomes include getting pregnant, contracting a sexually transmitted disease (STD) or experiencing side effects. By conducting a...

Persistent link: https://www.econbiz.de/10005791196

Portfolio Selection with Parameter and Model Uncertainty: A Multi-Prior Approach

Garlappi, Lorenzo; Uppal, Raman; Wang, Tan - C.E.P.R. Discussion Papers - 2005

In this paper, we show how an investor can incorporate uncertainty about expected returns when choosing a mean … investor is neutral to uncertainty, we consider the case where the investor has multiple priors and is averse to uncertainty … model aversion to uncertainty via a minimization over the set of priors. The multi-prior model has several attractive …

Persistent link: https://www.econbiz.de/10005791415

Portfolio Selection with Parameter and Model Uncertainty: A Multi-Prior Approach

Garlappi, Lorenzo; Uppal, Raman; Wang, Tan - C.E.P.R. Discussion Papers - 2005

Persistent link: https://www.econbiz.de/10005124485

Bailout Uncertainty in a Microfounded General Equilibrium Model of the Financial System

Cukierman, Alex; Izhakian, Yehuda - C.E.P.R. Discussion Papers - 2011

, ultimate lenders and financial intermediaries. The model is used to investigate the impact of uncertainty about the likelihood … between risk and uncertainty is implemented by applying the Gilboa-Schmeidler maxmin with multiple priors framework to lenders … include: (i) An unanticipated increase in bailout uncertainty raises interest rates, the volume of defaults in both the real …

Persistent link: https://www.econbiz.de/10009144737

Collective Labour Supply: Heterogeneity and Non-Participation

Blundell, Richard William; Chiappori, Pierre-André; … - C.E.P.R. Discussion Papers - 2005

We present identification and estimation results for the 'collective' model of labour supply in which there are discrete choices, censoring of hours and non-participation in employment. We derive the collective restrictions on labour supply functions and contrast them with restrictions implied...

Persistent link: https://www.econbiz.de/10005504396

Competitive Risk Sharing Contracts with One-Sided Commitment

Krueger, Dirk; Uhlig, Harald - C.E.P.R. Discussion Papers - 2004

pool of ex-ante identical agents that face idiosyncratic income uncertainty that makes them heterogeneous ex-post. In any …

Persistent link: https://www.econbiz.de/10005498096

Reason-Based Choice: A Bargaining Rationale for the Attraction and Compromise Effects

de Clippel, Geoffroy; Eliaz, Kfir - C.E.P.R. Discussion Papers - 2009

This paper proposes a model of boundedly rational choice that explains the well known attraction and compromise effects. Choices in our model are interpreted as a cooperative solution to a bargaining problem among an individual’s conflicting dual selves. We axiomatically characterize a unique...

Persistent link: https://www.econbiz.de/10004976794