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on Utility Models and Prospect Theory |
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Issue of 2022‒05‒30
seven papers chosen by |
| By: | Gaston Clément Nyassoke Titi (Université de Douala); Jules Sadefo-Kamdem (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier); Louis Aimé Fono (Université de Douala) |
| Abstract: | In this article, we provide a general framework for analyzing the optimal harvest of a renewable resource(i.e. fish, shrimp) assuming that the price and biomass evolve stochastically and harvesters have a constantrelative risk aversion (CRRA) . In order to take into account the impact of a sudden change in the environ-ment linked to the ecosystem, we assume that the biomass are governed by a stochastic differential equationof the ‘Gilpin-Ayala' type, with regime change in the parameters of the drift and variance. Under the aboveassumptions, we find the optimal effort to be deployed by the collector (fishery for example) in order tomaximize the expected utility of its profit function. To do this, we give the proof of the existence anduniqueness of the value function, which is derived from the Hamilton-Jacobi-Bellman equations associatedwith this problem, by resorting to a definition of the viscosity solution. |
| Keywords: | Stochastic Gilpin-Ayala,CRRA utility,Viscosity solutions,Renewable Resources,Optimal Effort |
| Date: | 2022–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03169348&r= |
| By: | Yann Bramoullé (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université); Christian Ghiglino (Essex Pathways, University of Essex - University of Essex) |
| Abstract: | We introduce loss aversion into a model of conspicuous consumption in networks. Agents allocate their income between a standard good and a status good to maximize a Cobb-Douglas utility. Agents interact over a connected network and compare their status consumption to their neighbors' average consumption. Loss aversion has a profound impact. If loss aversion is large enough relative to income heterogeneity, a continuum of Nash equilibria appears and all agents consume the same quantity of status good. Otherwise, there is a unique Nash equilibrium and richest agents earn strict status gains while poorest agents earn strict status losses. |
| Keywords: | Loss Aversion,Conspicuous Consumption,Social Networks |
| Date: | 2022–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03630455&r= |
| By: | Ehud Lehrer; Dimitry Shaiderman |
| Abstract: | In the classical Bayesian persuasion model an informed player and an uninformed one engage in a static interaction. The informed player, the sender, knows the state of nature, while the uninformed one, the receiver, does not. The informed player partially shares his private information with the receiver and the latter then, based on her belief about the state, takes an action. This action, together with the state of nature, determines the utility of both players. This paper analyzes a dynamic Bayesian persuasion model where the state of nature evolves according to a Markovian law. Here, the sender always knows the realized state while the receiver randomly gets to know it. We discuss the value of the sender when he becomes more and more patient and its relation to the \emph{revelation rate}, namely the probability at which the true state is revealed to the receiver at any stage. } |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2204.08659&r= |
| By: | Cervera-Ferri, Pablo; Insa-Sánchez, Pau |
| Abstract: | Historians of economic thought have carried out detailed studies of classical and marginalist approaches to value based on production cost and utility respectively, not to mention about the fusion of both interpretations by the neoclassical school. This is not the case with rareness value, a theory commonly attributed to Léon Walras, although Aristotle surely had rareness in mind when he first attempted to explain chrematistics. This article focuses on how our understanding of rareness has evolved from the earliest economic formulations to those of Auguste and Léon Walras, contesting Rothbard’s thesis that there is only one way in which the transmission of the utility theory of value can be tracked from scholasticism to the Austrian school. On the contrary, the concept of rareness continued to figure in some theories of value of the French Enlightenment, especially those that emerged within Calvinist circles, and was recovered in times of reaction against the dominant classicism. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:5nwcb&r= |
| By: | Alexey V. Osipov; Nikolay N. Osipov |
| Abstract: | We outline how to create a mechanism that provides an optimal way to elicit, from an arbitrary group of experts, the probability of the truth of an arbitrary logical proposition together with collective information that has an explicit form and interprets this probability. Such a system could, in particular, incentivize experts from all over the world to collectively solve scientific or medical problems in a very efficient manner. In our main considerations about real experts, they are not assumed to be Bayesian and their behavior is described by utilities that satisfy the von Neumann-Morgenstern axioms only locally. |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2204.13424&r= |
| By: | Daniel F. Garrett (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Renato Gomes (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique); Lucas Maestri (FGV-EPGE - Universidad de Brazil) |
| Abstract: | We study competition by firms that simultaneously post (potentially nonlinear) tariffs to consumers who are privately informed about their tastes. Market power stems from informational frictions, in that consumers are heterogeneously informed about firms' offers. In the absence of regulation, all firms offer quantity discounts. As a result, relative to Bertrand pricing, imperfect competition benefits disproportionately more consumers whose willingness to pay is high, rather than low. Regulation imposing linear pricing hurts the former but benefits the latter consumers. While consumer surplus increases, firms' profits decrease, enough to drive down utilitarian welfare. By contrast, improvements in market transparency increase utilitarian welfare, and achieve similar gains on consumer surplus as imposing linear pricing, although with limited distributive impact. On normative grounds, our analysis suggests that banning price discrimination is warranted only if its distributive benefits have a weight on the societal objective. |
| Keywords: | Asymmetric information,Informational frictions,Linear pricing,Nonlinear pricing,Oligopoly |
| Date: | 2022–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03629517&r= |
| By: | Francesca Barigozzi (UNIBO - Alma Mater Studiorum University of Bologna); Helmuth Cremer (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jean-Marie Lozachmeur (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We study the design of pension benets for male and female workers. Women live longer than men but have a lower wage. Individuals can be single or live in couples who pool their incomes. Social welfare is utilitarian but an increasing concave transformation of individuals lifetime utilities introduces the concern for redistribution between individuals with di¤erent life-spans. We derive the optimal direction of redistribution and show how it is a¤ected by a gender neutrality rule. With singles only, a simple utilitarian solution implies re- distribution from males to females. When the transformation is su¢ ciently concave redistribution may or may not be reversed. With couples only, the ranking of gender retirement ages is always reversed when the transformation is su¢ ciently concave. Under gender neutrality pension schemes must be self-selecting. With singles only this implies distortions of retirement decision and restricts redistribution across genders. With couples, a rst best that implies a lower retirement age for females can be implemented by a gender-neutral system. Otherwise, gender neutrality implies equal retirement ages and restricts the possibility to compensate the shorter-lived individuals. Calibrated simulations show that when singles and couples coexist, gender neutrality substantially limits redistribution in favor of single women and fully prevents redistribution in favor of male spouses. |
| Keywords: | Retirement systems,Gender gap in longevity,Gender wage gap |
| Date: | 2022–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03629490&r= |