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on Utility Models and Prospect Theory |
| By: | Akay, Alpaslan; Martinsson, Peter; Medhin, Haileselassie; Trautmann, Stefan |
| Abstract: | We looked at risk and ambiguity attitudes among Ethiopian peasants in one of the poorest regions of the world and compared their attitudes to a standard Western university student sample elicited by the same decision task. Strong risk aversion and ambiguity aversion were found with the Ethiopian peasants, and these attitudes are similar to those of the university students. Testing for the effect of socioeconomic variables on uncertainty attitudes showed that poor health increased both risk and ambiguity aversion. |
| Keywords: | risk attitudes, ambiguity attitudes, poverty, cultural differences |
| JEL: | D81 C93 O12 |
| Date: | 2010–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-10-04-efd&r=upt |
| By: | Endre Pap (Department of Mathematics and Informatics, University Novi Sad and Academy of Sciences and Arts of Vojvodina, Novi Sad, Serbia) |
| Abstract: | It is presented an approach to decision theory based upon nonprobabilistic uncertainty. There is an axiomatization of the hybrid probabilisticpossibilistic mixtures based on a pair of triangular conorm and triangular norm satisfying restricted distributivity law, and the corresponding non-additive Smeasure. This is characterized by the families of operations involved in generalized mixtures, based upon a previous result on the characterization of the pair of continuous t-norm and t-conorm such that the former is restrictedly distributive over the latter. The obtained family of mixtures combines probabilistic and idempotent (possibilistic) mixtures via a threshold. |
| Keywords: | Decision making, Utility theory, Possibilistic mixture, Hybrid probabilistic- possibilistic mixture, Triangular norm, Triangular conorm, Pseudoadditive measure. |
| JEL: | C44 L97 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:voj:wpaper:200941&r=upt |
| By: | Martin Ellison; Joseph Pearlman |
| Abstract: | Saddlepath learning occurs when agents know the form but not the coefficients of the sad?dlepath relationship defining rational expectations equilibrium. Under saddlepath learning, we obtain a completely general relationship between determinacy and e-stability, and generalise Min?imum State Variable results previously derived only under full information. When the system is determinate, we show that a learning process based on the saddlepath is always e-stable. When the system is indeterminate, we find there is a unique MSV solution that is iteratively e-stable. However, in this case there is a sunspot solution that is learnable as well. We conclude by demon?strating that our results hold for any information set. |
| Keywords: | e-stability, determinacy, learning, saddlepath stability. |
| JEL: | C60 E00 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmacp:0710&r=upt |
| By: | Charles Bellemare; Alexander Sebald; Martin Strobel |
| Abstract: | We estimate structural models of guilt aversion to measure the population level of willingness to pay (WTP) to avoid feeling guilt by letting down another player. We compare estimates of WTP under the assumption that higher-order beliefs are in equilibrium (i.e. consistent with the choice distribution) with models estimated using stated beliefs which relax the equilibrium requirement. We estimate WTP in the later case by allowing stated beliefs to be correlated with guilt aversion, thus controlling for a possible source of a consensus effect. All models are estimated using data from an experiment of proposal and response conducted with a large and representative sample of the Dutch population. Our range of estimates suggests that responders are willing to pay between 0.40 and 0.80 Euro to avoid letting down proposers by 1 Euro. Furthermore, we find that WTP estimated using stated beliefs is substantially overestimated (by a factor of two) when correlation between preferences and beliefs is not controlled for. Finally, we find no evidence that WTP is significantly related to the observable socio-economic characteristics of players. |
| Keywords: | Guilt aversion, Willingness to pay, Equilibrium and stated beliefs models |
| JEL: | C93 D63 D84 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1011&r=upt |
| By: | Yucel, Eray; Tokel, Emre |
| Abstract: | All decisions are practically made within a chainwise social setup named a decision-making chain (DMC). This paper considers some cases of an idea (a project proposal) propagating through an organizational DMC. Survival of a proposal through successive links of the DMC depends on the relative power of those links, in addition to proposal’s intrinsic value. Then it is not impossible to reject a good proposal or to fail to reject a bad proposal, either of which may generate undesired, though not detrimental, outcomes. We consider here a simple metric to assess quality of decision-making. The notion of quality here derives from “not declining (not accepting) a project that is of high (poor) intrinsic value”. As Fibonacci series establish the mathematical basis of our proposed metric, metric is simply named a Fibonacci metric. |
| Keywords: | Decision making chains; Innovation; Fairness metric; Fibonacci series |
| JEL: | Z1 C00 A1 |
| Date: | 2010–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20973&r=upt |
| By: | Ligon, Ethan (University of California, Berkeley. Dept of agricultural and resource economics) |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:are:cudare:1095&r=upt |
| By: | Adi Schnytzer (Department of Economics and Logistics,respectively,Bar Ilan University,Israel); Sara Westreich |
| Abstract: | We extend the pioneering work of Aumann and Serrano by presenting an index of inherent riskiness of a gamble having the desirable properties of their index, while being applicable to gambles with either positive or negative expectations. As such, our index provides a measure of riskiness which is of use for both risk lovers and risk aversive gamblers, and is defined for all discrete and a large class of continuous gambles. We analyze abstract properties of our index, and present in addition three empirical applications - roulette, horse betting market and US options traded on financial stocks between 2005 and 2007. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2009-9&r=upt |