first-order approximated solution built by perturbation methods accounts for risk. We show that risk matters economically in … a real business cycle (RBC) model with habit formation and capital adjustment costs and that neglecting risk leads to …

The quasi-linear quadratic utility model is widely used in economics. The knowledge of its exact origin is less …

We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty … deviation (in beliefs, utility, or perceived prices) is within e of expected utility theory. The number e can then be used as a … distance to the theory. We apply our methodology to three recent large-scale experiments. Many subjects in those experiments …

Bayesian updating is the dominant theory of learning. However, the theory is silent about how individuals react to …

behavior of expected utility maximizers. Two types are characterized by high likelihood insensitivity; one of them is ambiguity …

We characterize intertemporal utility functions over heterogeneous goods that feature (i) a constant elasticity of … the goods. We find that a standard (stationary) intertemporal utility function is consistent with these two properties if … elasticities of substitution are identical, or if the instantaneous utility function is Cobb-Douglas. We also characterize the …

intergenerational inequality aversion and for risk aversion. If growth increases (reduces) intra-generational inequality, the SDR is …

hitting a threshold, as well as a set of risk-modified optimality conditions for overall wealth management, as long as no …