We use household survey data to construct a direct measure of absolute risk aversion based on the maximum price a … background risk. We find that risk aversion is a decreasing function of endowment - thus rejecting CARA preferences – but that …' attributes are of little help in predicting their degree of risk aversion, which is characterized by massive unexplained …

We show that in order to determine whether one decision-maker is more risk averse than another, it is sufficient to … comparisons of risk aversion can be made even in situations of ‘background risk’. Since expected utility becomes a function of … mean and standard deviation, risk aversion can be measured by the marginal rate of substitution between mean and standard …

We investigate the outcome of bargaining when a player’s pay-off from agreement is risky. We find that a risk …-averse player typically increases his equilibrium receipts when his pay-off is made risky. This is because the presence of risk …. We show that the effect of risk on receipts can be sufficiently strong that a decreasingly risk-averse player may be …

We analyse bidding behaviour in auctions when risk-averse buyers bid for a good whose value is risky. We show that when … risk in the valuations increases, DARA bidders will reduce their bids by more than the appropriate increase in the risk … marginal utility of income increases with risk, so buyers are reluctant to bid so highly. We also show that precautionary …

endogenous choice, groups typically vote for the reward option, even though punishment is actually more effective in sustaining …

candidate is expectations: what people expect could affect how they feel about what actually occurs. In a real-effort experiment …

This paper analyzes the effects of network positions and individual risk attitudes on individuals' strategic decisions … in an experiment where actions are strategic substitutes. The game theoretic basis for our experiment is the model of … factors, such as the number of (direct) neighbors, local clustering and individuals' risk attitudes. …

In this paper, we study the determinants of the value of informal risk sharing groups. In particular, we look at the … if individuals can deviate form risk sharing agreements in coalitions or not. We test empirically several predictable … size of risk sharing groups can be rejected or that only imperfect risk sharing is obtained within the village because of …

The preferred risk habitat hypothesis, introduced here, is that individual investors select stocks with volatilities … commensurate with their risk aversion; more risk-averse individuals pick lower-volatility stocks. The investors' portfolio … stocks are sold they are replaced by stocks of similar volatilities, and the more risk averse customers indeed hold less …

Risk-adjusted linear-quadratic-Gaussian (LQG) optimal control with perfect and imperfect observation of the economy … modelling errors, since precaution reduces the power of its instruments by these variances. Also, prudence implies less weight …. Prudence pushes up this reaction coefficient as well. If data are poor and appear with a lag, a prudent central bank responds …