Der Koalitionsvertrag der Bundesregierung sieht vor, dass der Einschlag in alten, naturnahen Buchenwäldern im öffentlichen Besitz gestoppt werden soll (SPD/Grüne/FDP 2021, Zeile 1219-1220). Im vorliegenden Thünen Working Paper werde für alte, naturnahe Buchenwälder mögliche Definitionen...

We characterize optimal consumption policies in a recursive intertemporal utility framework with local substitution. We establish existence and uniqueness and a version of the Kuhn-Tucker theorem characterizing the optimal consumption plan. An explicit solution is provided for the case when the...

We present a novel characterization of random rank-dependent expected utility for finite datasets and finite prizes. As a byproduct, we obtain a characterization of random expected utility that works for finite datasets. The test lends itself to statistical testing. We apply our test to an...

Nozick's "utility monster" - a being who is more efficient than other persons at transforming resources into well-being - is often regarded as deeply impossible, on the ground of the incapacity of a single person to have a life that is better than a large number of other lives. In this article,...

This paper investigates the optimal design of incentives when agents distort probabilities. We show that the type of probability distortion displayed by the agent and its degree determine whether an incentivecompatible contract can be implemented, the strength of the incentives included in the...

Among the reasons behind the choice behavior of an individual taking a stochastic form are her potential indifference or indecisiveness between certain alternatives, and/or her willingness to experiment in the sense of occasionally deviating from choosing a best alternative in order to give a...

We define the axioms of quantum game theory and show that classical, Nashian, game theory is a special case of quantum game theory. In our more general framework, we prove the insufficiency of the von Neumann Morgenstern utility, because it is not uniquely defined. Relating utility to the time...

For most of the second half of the 20th century, modern neoclassical finance, and more generally much of social science, has been based on the von Neumann and Morgenstern (VM) (1944) game theory expected utility axioms as a prescription for rational decision making under uncertainty. Traditional...

We generalize the stochastic revealed preference methodology of McFadden and Richter (1990) for finite choice sets to settings with limited consideration. Our approach is nonparametric and requires partial choice set variation. We impose a monotonicity condition on attention first proposed by...

Utility tokens are digital currencies that serve as the only accepted means of payment for services and products provided through a blockchain-based platform. They finance the development of their product or service, reward and incentivize early adopters and network promoters, align economic...

The Allais Paradox is a central motivation for several prominent extensions of expected utility, including rank-dependent theories and the theory of fanning-out indifference curves. We examine the ability of these theories to explain the Allais common consequence effect. The only extension of...

This paper studies existence and uniqueness of recursively defined utility in asset pricing models with preference shocks. We provide conditions that clarify existence and uniqueness for a wide range of models, including exact necessary and sufficient conditions for the most standard...

This paper studies a bilateral risk-sharing problem where both agents are rank-dependent utility maximizers. The market restricts risk allocations to be comonotonic. We first characterize the optimal risk allocation in an implicit way through the calculus of variations. Then, based on the...

What are the economic consequences to U.S. natives of the growing diversity of American cities? Is their productivity or utility affected by cultural diversity as measured by diversity of countries of birth of U.S. residents? We document in this paper a very robust correlation: US-born citizens...

We consider social decisions under uncertainty. We show that the ex ante social preference order satisfies a Pareto axiom with respect to ex ante individual preferences, along with an axiom of Statewise Dominance, if and only if all agents admit subjective expected utility (SEU) representations,...

Der Koalitionsvertrag der Bundesregierung sieht vor, dass der Einschlag in alten, naturnahen Buchenwäldern im öffentlichen Besitz gestoppt werden soll (SPD/Grüne/FDP 2021, Zeile 1219-1220). Im vorliegenden Thünen Working Paper werde für alte, naturnahe Buchenwälder mögliche Definitionen...

This note provides a nonparametric test for dynamic discrete random utility models (DDRUM). The methodology can be used to understand the welfare implications of price changes in demand data when there is no uncertainty for consumers that have preferences over product characteristics or discrete...

Economists have become increasingly interested in using attention to explain behavioral patterns both on the micro and macro level. This has resulted in several disparate theoretical approaches. Some, like rational inattention, assume a "top-down" model of executive optimization. Others, like...

In multi-object auction models with unitary demand agents, if agents utility functions satisfy quasi-linearity, three auction formats, sealed-bid auction, exact ascending auction, and approximate ascending auction, are known to identify the minimum price equilibrium (MPE), and exhibit elegant...

We present a tractable generalization of quantal response equilibrium via non-expected utility preferences. In particular, we introduce concave perturbed utility games in which an individual has strategy-specific utility indices that depend on the outcome of the game and an additively separable...

The paper provides an empirical discussion of the national emergency utilization rate (NEUR), which is based on a "national emergency" definition of potential output and is published by the US Census Bureau. Over the peak-to-peak period 1989-2019, the NEUR decreased by 14.2 percent. The paper...

This paper proposes an approximation method to create an optimal continuous-time portfolio strategy based on a combination of neural networks and Monte Carlo, named NNMC. This work is motivated by the increasing complexity of continuous-time models and stylized facts reported in the literature....

Although the link between risk aversion and diminishing marginal utility of wealth is academically well established, theoretical discussions concerning its empirical validity remain. The presented, review-type paper aims to briefly examine theoretical roots responsible for the different views on...

Choosing solutions under risk and uncertainty requires the consideration of several factors. One of the main factors in choosing a solution is modeling the decision maker's attitude to risk. The expected utility theory was the first approach that allowed to correctly model various nuances of the...

Despite the truthful dominant strategy, participants in strategy-proof mechanisms submit manipulated preferences. In our model, participants dislike rejections and enjoy the confirmation from getting what they declared most desirable. Formally, the payoff from a match decreases in its position...

We generalize the stochastic revealed preference methodology of McFadden and Richter (1990) for finite choice sets to settings with limited consideration. Our approach is nonparametric and requires partial choice set variation. We only impose a monotonicity condition on attention first proposed...

Individuals' preferences underlying most economic behavior are likely to display substantial heterogeneity. This paper reports on direct measures of preference parameters relating to risk tolerance, time preference, and intertemporal substitution. These experimental measures are based on survey...

Suicide rates among youths aged 15-24 have tripled in the past half-century, even as rates for adults and the elderly have declined. And for every youth suicide completion, there are nearly 400 suicide attempts. This paper examines the dynamics of youth suicide attempts and completions, and...

We study utility indifference pricing of untradeable assets in incomplete markets using a symmetric asymptotic hyperbolic absolute risk aversion (SAHARA) utility function, both from the buyer's and seller's perspective. The use of the SAHARA utility function allows us to tackle the ``short...

In this article, we consider the optimal investment-consumption problem for an agent with preferences governed by Epstein--Zin stochastic differential utility (EZ-SDU) who invests in a constant-parameter Black-Scholes-Merton market over the infinite horizon. The parameter combinations that we...

A “conservation good” (such as a tropical forest) is owned by a seller who is tempted to consume (or cut), but a buyer benefits more from conservation. The seller does conserve if the buyer is expected to buy, but the buyer is unwilling to pay as long as the seller conserves. This...

One can be independent, or subject to decisions made by others. This paper empirically tests whether individuals attach an intrinsic value to the institutional difference between independence and hierarchy. Taking self-employment as an important case of independence, it is shown that the...