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Probability adjusted rank-discounted utilitarianism

Asheim, Geir B.; Zuber, Stéphane - 2014

We propose and axiomatize probability adjusted rank-discounted critical-level generalized utilitarianism (PARDCLU). We thus generalize rank-discounted utilitarianism (RDU) (proposed by Zuber and Asheim, 2012) to variable population and risky situations and thereby take important steps towards...

Persistent link: https://www.econbiz.de/10010337541

Surviving the Titanic disaster : economic, natural and social determinants

Frey, Bruno S.; Savage, David A.; Torgler, Benno - 2009

The sinking of the Titanic in April 1912 took the lives of 68 percent of the people aboard. Who survived? It was women and children who had a higher probability of being saved, not men. Likewise, people traveling in first class had a better chance of survival than those in second and third...

Persistent link: https://www.econbiz.de/10003808139

Risk matters : breaking certainty equivalence

Parra-Alvarez, Juan Carlos; Polattimur, Hamza; Posch, Olaf - 2020

In this paper we use the property that certainty equivalence, as implied by a first-order approximation to the solution of stochastic discrete-time models, breaks in its equivalent continuous-time version. We study the extent to which a first-order approximated solution built by perturbation...

Persistent link: https://www.econbiz.de/10012211025

Approximate expected utility rationalization

Echenique, Federico; Imai, Taisuke; Saito, Kota - 2018

We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty. In a revealed preference setup, and given a positive number e, we provide a characterization of the datasets whose deviation (in beliefs, utility, or perceived prices) is...

Persistent link: https://www.econbiz.de/10011931433

Rank dependent utility, tax evasion and labor supply

Eide, Erling; Simson, Kristine von; Strøm, Steinar - 2010

In the simple Allingham-Sandmo portfolio model of tax evasion an expected utility maximizer will cheat more than what is estimated in empirical studies. Two main types of explanation have been suggested as solutions to this puzzle: (1) Tax payers act according to some non-expected utility...

Persistent link: https://www.econbiz.de/10008697806

When is ambiguity-attitude constant?

Eichberger, Jürgen; Grant, Simon; Kelsey, David - 2012

This paper studies how updating affects ambiguity-attitude. In particular we focus on the generalized Bayesian update … of the Jaffray-Phillipe sub-class of Choquet Expected Utility preferences. We find conditions for ambiguity-attitude to … be the same before and after updating. A necessary and sufficient condition for ambiguity-attitude to be unchanged when …

Persistent link: https://www.econbiz.de/10009514770

A parametric analysis of prospect theory's functionals for the general population

Booij, Adam S.; Praag, Bernard M. S. van; Kuilen, Gijs … - 2009

This paper presents the results of an experiment that completely measures the utility function and probability weighting function for different positive and negative monetary outcomes, using a representative sample of N = 1935 from the general public. The results confirm earlier findings in the...

Persistent link: https://www.econbiz.de/10003824984

Collective risk-taking decisions with heterogeneous beliefs

Gollier, Christian - 2003

Suppose that a group of agents having divergent expectations can share risks efficiently. We examine how this group should behave collectively to manage these risks. We show that the beliefs of the representative agent is in general a function of the group.s wealth level, or equivalently, that...

Persistent link: https://www.econbiz.de/10011507677

A model of reference-dependent belief updating

Maier, Johannes K.; König, Clemens - 2016

We propose a model of instrumental belief choice under loss aversion. When new information arrives, an agent is prompted to abandon her prior. However, potential posteriors may induce her to take actions that generate a lower utility in some states than actions induced by her prior. These losses...

Persistent link: https://www.econbiz.de/10011557745

Once upon a time preference : how rationality and risk aversion change the rationale for discounting

Traeger, Christian - 2012

The paper develops an axiomatic framework for rational decision making. The von Neumann-Morgenstern axioms give rise to a richer risk attitude than that captured in the standard discounted expected utility model. I derive three models that permit a more comprehensive risk evaluation. These...

Persistent link: https://www.econbiz.de/10009533970