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Epstein, Larry G.; Kopylov, Igor - In: Theoretical economics : TE ; an open access journal in … 2 (2007) 3, pp. 232-259

Individuals often lose confidence in their prospects as they approach the `moment of truth.' An axiomatic model of such individuals is provided. The model adapts and extends (by relaxing the Independence axiom) Gul and Pesendorfer's model of temptation and self-control to capture an individual...

Persistent link: https://www.econbiz.de/10011702513

Information Inertia

Illeditsch, Philipp K. - 2020

We show that aversion to risk and ambiguity leads to information inertia when investors process public news about assets. Optimal portfolios do not always depend on news that is worse than expected; hence, the equilibrium stock price does not reflect this bad news. This informational inefficiency...

Persistent link: https://www.econbiz.de/10012857251

Subjective Information Choice Processes

Dillenberger, David; Krishna, R. Vijay; Sadowski, Philipp - 2020

We propose a class of dynamic models that capture subjective (and hence unobservable) constraints on the amount of information a decision maker can acquire, pay attention to, or absorb, via an Information Choice Process (icp). An icp specifies the information that can be acquired about the...

Persistent link: https://www.econbiz.de/10014096031

The Sustainability Liability : Potential Negative Effects of Ethicality on Product Preference

Luchs, Michael - 2014

Manufacturers are increasingly producing and promoting sustainable products (i.e., products that have a positive social and/or environmental impact). However, relatively little is known about how product sustainability impacts consumers' preferences. We propose that sustainability may not always...

Persistent link: https://www.econbiz.de/10013069631

Confidence Theory : Belief Formation in Choice Under Risk

Milovanović, Goran - 2014

In confidence theory, the decision maker relies on statistical regularities from the economic environment to adopt … formation in choice under risk. Three novel experiments are presented that demonstrate the ability of the new theory to explain … confidence theory is an elaboration of Viscusi's prospective reference theory and accounts for the robust violations of expected …

Persistent link: https://www.econbiz.de/10013061467

Risk attitudes with state-dependent indivisibilities in consumption

Fels, Markus - 2019

Some consumption opportunities are both indivisible and only valuable in particular tates of nature. The existence of such state-dependent indivisible consumption opportunities influences a person’s risk attitudes. In general, people are not risk averse anymore even if utility from divisible...

Persistent link: https://www.econbiz.de/10011998942

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

Preference for Ambiguity and Difficult Choices

Heydari, Pedram - 2019

A well-known finding in behavioral economics is that people often avoid ambiguous gambles whose outcome probabilities are unknown in favor of risky gambles whose outcome probabilities are known, a phenomenon that is called ambiguity aversion. In a novel preregistered online experiment with 1195...

Persistent link: https://www.econbiz.de/10012861160

Stochastic choice and preference reversals

Alós-Ferrer, Carlos; Buckenmaier, Johannes; Garagnani, … - 2021 - Revised version

Preferences over risky alternatives can be elicited by different methods, including direct pairwise choices and willingness-to-accept valuations. The results are frequently at odds, casting doubts on the foundations of economics. We develop a stochastic choice model predicting when...

Persistent link: https://www.econbiz.de/10012604712

Risk attitudes with state-dependent indivisibilities in consumption

Fels, Markus - 2019

Some consumption opportunities, e.g. medical treatments, are both indivisible and only valuable in particular states of nature. The existence of such state-dependent indivisible consumption opportunities influences a person's risk attitudes. In general, people are not risk averse anymore even if...

Persistent link: https://www.econbiz.de/10012231153