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How does risk tolerance vary with stake size? This important question cannot be adequately answered if framing effects … coherent change in relative risk aversion is observed for losses. The increase in relative risk aversion over gains cannot be …
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decision making under risk. Both theories incorporate well-known deviations from Expected Utility Maximization such as the … Allais paradox or the fourfold pattern of risk attitudes. Stochastic Expected Utility Theory parsimoniously extends the …
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When valuing risky prospects, people typically overweight small probabilities and underweight medium and large probabilities, but there is vast heterogeneity in individual behavior. We explore the relationship between person-specific probability weights, estimated from investment decisions in a...
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