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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...
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the expected value of a lottery to the latter, so they are weakly risk averse. Besides explaining behavioral … irregularities like the expected utility paradoxes of Allais and Rabin, CT also separates risk attitude in the strong sense from … attitude towards wealth. Risk attitude is completely determined by the curvature of vuand is independent of the value function …
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