ability”, such as poor education, unemployment, and little financial sophistication. Based on prospective reference theory, we … is linked to risk-related characteristics, such as risk tolerance and optimism. This indicates a potential problem as …

function of the group.s wealth level, or equivalently, that the representative agent has a state-dependent utility function. We … degree of pessimism of the representative agent is the mean of the individual ones weighted by their index of absolute risk …

So far, "salience theory of choice under risk" has been mainly applied to situations of risk rather than to those of … uncertainty. In this paper, we show that salience theory provides the prediction that Allais paradoxes should never occur in the …