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Rare Disasters and Risk Sharing with Heterogeneous Beliefs
Chen, Hui - 2010
Although the threat of rare economic disasters can have large effect on asset prices, difficulty in inference regarding both their likelihood and severity provides the potential for disagreements among investors. Such disagreements lead investors to insure each other against the types of...
Persistent link: https://www.econbiz.de/10012462617
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How Much Would You Pay to Resolve Long-Run Risk?
Epstein, Larry G. - 2013
Though risk aversion and the elasticity of intertemporal substitution have been the subjects of careful scrutiny when calibrating preferences, the long-run risks literature as well as the broader literature using recursive utility to address asset pricing puzzles have ignored the full...
Persistent link: https://www.econbiz.de/10012459120
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An Empirical Assessment of Alternative Models of Risky Decision Making
Baker, Joanna R. - 1988
In this paper, we assess the degree to which four of the most commonly used models of risky decision making can explain … explain the decision-making behavior of the majority of our subjects. Surprisingly, we find that the choice behavior of the … of risky decision making …
Persistent link: https://www.econbiz.de/10012476344
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Inducing Leaders to Take Risky Decisions : Dismissal, Tenure, and Term Limits
Aghion, Philippe - 2014
In this paper we analyze the problem of whether and/or when to replace a leader (agent) when no monetary rewards are available, and it is the leader's competence rather than effort that is being evaluated. The only decisions that the leader takes over time are whether to undertake risky but...
Persistent link: https://www.econbiz.de/10012458366
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Buyout Activity : The Impact of Aggregate Discount Rates
Haddad, Valentin - 2016
Buyout booms form in response to declines in the aggregate risk premium. We document that the equity risk premium is the primary determinant of buyout activity rather than credit-specific conditions. We articulate a simple explanation for this phenomenon: a low risk premium increases the present...
Persistent link: https://www.econbiz.de/10012456263
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Decision-Making under the Gambler's Fallacy : Evidence from Asylum Judges, Loan Officers, and Baseball Umpires
Chen, Daniel - 2016
We find consistent evidence of negative autocorrelation in decision-making that is unrelated to the merits of the cases … decisions that result in errors. The negative autocorrelation is stronger among more moderate and less experienced decision … occur close in time, and when decision-makers face weaker incentives for accuracy. Other explanations for negatively …
Persistent link: https://www.econbiz.de/10012026883
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Delays in Claiming Social Security Benefits
Coile, Courtney - 1999
This paper focuses on Social Security benefit claiming behavior, a take-up decision that has been ignored in the …
Persistent link: https://www.econbiz.de/10012471466
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The Influence Of Probability on Risky Choice : A parametric Examination
Lattimore, Pamela K. - 1992
The appeal of expected utility theory as a basis for a descriptive model of risky decision making has diminished is a … parametric model of risky decision making. Our results suggest that models which provide for probability transformations are most …
Persistent link: https://www.econbiz.de/10012474843
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Complexity and Sophistication
Carvalho, Leandro - 2019
Many financial situations present individuals with simple alternatives to solving complex problems. Are individuals sophisticated; do they know when they are better off opting out of complexity? We tested complexity's effects and evaluated sophistication in a large and diverse sample. We randomly...
Persistent link: https://www.econbiz.de/10012479984
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Probabilistic States versus Multiple Certainties : The Obstacle of Uncertainty in Contingent Reasoning
Martínez-Marquina, Alejandro - 2017
We propose a new hypothesis, the Power of Certainty, to help explain agents' difficulties in making choices when there are multiple possible payoff-relevant states. In the probabilistic 'Acquiring-a-Company' problem an agent submits a price to a firm before knowing whether the firm is of low or...
Persistent link: https://www.econbiz.de/10012453683