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Expected Utility Theory and Inner and Outer Measures of Loss Aversion

Charles-Cadogan, G. - 2018

We introduce a weak rank dependent utility (RDU) model, with one extra parameter compared to the canonical expected utility (EUT) model, which makes many of the same predictions as cumulative prospect theory (CPT). The model extends a set of nonconvex preferences to its maximal inner convex...

Persistent link: https://www.econbiz.de/10012936192

The Descriptive and Predictive Adequacy of Theories of Decision Making Under Uncertainty/Ambiguity

Hey, John D; Lotito, Gianna; Maffioletti, Anna - Department of Economics and Related Studies, University … - 2008

In this paper we examine the performance of theories of decision making under uncertainty/ambiguity from the … end, we employ an innovative experimental design which enables us to reproduce ambiguity in the laboratory in a …

Persistent link: https://www.econbiz.de/10005328553

Loss modification incentives for insurers under expected utility and loss aversion

Soetevent, Adriaan R.; Zhou, Liting - 2014

Given the possibility to modify the probability of a loss, will a profit-maximizing insurer engage in loss prevention or is it in his interest to increase the loss probability? This paper investigates this question. First, we calculate the expected profit maximizing loss probability within an...

Persistent link: https://www.econbiz.de/10010395085

Under risk, over time, regarding other people : language and rationality within three dimensions

Jullien, Dorian - 2018

This paper conducts a systematic comparison of behavioral economics’s challenges to the standard accounts of economic behaviors within three dimensions: under risk, over time and regarding other people. A new perspective on two underlying methodological issues, i.e., interdisciplinarity and...

Persistent link: https://www.econbiz.de/10011809698

Choquet OK?

Hey, John D; Lotito, Gianna; Maffioletti, Anna - Department of Economics and Related Studies, University … - 2007

There is a large theoretical literature in both economics and psychology on decision making under ambiguity (as … design, in which we create genuine ambiguity in the laboratory and can control the amount of ambiguity, we generate data … how the fit changes when we vary the ambiguity. We find that the Choquet formulation performs best overall, though it is …

Persistent link: https://www.econbiz.de/10005523931

The relationship between farmers' shock experiences and their uncertainty preferences - experimental evidence from Mexico

Freudenreich, Hanna; Musshoff, Oliver; Wiercinski, Ben - 2017

aversion, along with a coefficient for ambiguity aversion. These are estimated controlling for survey data of sociodemographic … related to loss aversion or ambiguity aversion. …

Persistent link: https://www.econbiz.de/10011631020

The relationship between farmers' shock experiences and their uncertainty preferences - experimental evidence from Mexico

Freudenreich, Hanna; Mußhoff, Oliver; Wiercinski, Ben - 2017

aversion, along with a coefficient for ambiguity aversion. These are estimated controlling for survey data of sociodemographic … related to loss aversion or ambiguity aversion. …

Persistent link: https://www.econbiz.de/10011631008

An inquiry into the nature and causes of the description - experience gap

Cubitt, Robin P.; Kopsacheilis, Orestis; Starmer, Chris - 2020

to information differences (sampling bias), to a feature of preferences (ambiguity sensitivity) or to aspects of …

Persistent link: https://www.econbiz.de/10012242996

Corporate Management of Highly Dynamic Risks: The Case of Terrorism Insurance in Germany

Thomann, Christian; Pascalau, Razvan; Schulenburg, … - Volkswirtschaftliche Fakultät, … - 2007

This article extends the theory of corporate risk management to encompass highly dynamic risks. Taking Viscusi'�s (1989) prospective reference from the context of individual decision making and applying it to a corporate context we propose a theory of how corporations process new information....

Persistent link: https://www.econbiz.de/10005789691

Probability Dominance

Diecidue, Enrico - 2018

The most commonly employed decision making paradigms are expected utility, prospect theory and regret theory. We examine the simple heuristic of maximizing the probability of being ahead, which in some natural economic situations may be in contradiction to all three of the above fundamental...

Persistent link: https://www.econbiz.de/10012911948