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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

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

Combining imprecise or conflicting probability judgments: A choice-based study

Baillon, Aurelien; Cabantous, Laure - Business School, University of Nottingham - 2009

Sources of uncertainty appear to affect attitude towards ambiguity. For instance, when two advisors agree on a range of … the same. This study draws upon prospect theory and ambiguity research to empirically test how sources of uncertainty …. revealed beliefs). Findings support the predictions that the source of ambiguity matters in particular for low and high …

Persistent link: https://www.econbiz.de/10005014574

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

Are Commercial Fishers Risk Lovers?

Eggert, Håkan; Martinsson, Peter - Nationalekonomiska institutionen, Handelshögskolan - 2003

Empirical studies of fishers’ preferences have found that most fishers are risk-averse, while expected-utility theory predicts risk neutrality even for sizable stakes. We test this prediction using data from a stated choice experiment with Swedish commercial fishers. Our results show that...

Persistent link: https://www.econbiz.de/10005651612

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

Expected Utility Preferences versus Prospect Theory Preferences in Bargaining

Khan, Abhimanyu - 2018

Are individuals always better off when their preferences can be represented by expected utility?I study this question in a bargaining game where individuals bargain over a pie of fixed size, and I contrast the share received in the long-run by expected utility maximisers with the share they...

Persistent link: https://www.econbiz.de/10012909950

Chapter 4. Assessment and Estimation of Risk Preferences

Holt, Charles A.; Laury, Susan K. - In: Handbook of the economics of risk and uncertainty : volume 1, (pp. 135-201). 2014

This chapter surveys the rapidly growing literature in which risk preferences are measured and manipulated in laboratory and field experiments. The most commonly used measurement instruments are: an investment task for allocations between a safe and risky asset, a choice menu task for eliciting...

Persistent link: https://www.econbiz.de/10014025528