Weber's Law and the Biological Evolution of Risk Preferences: The Selective Dominance of the Logarithmic Utility Function, 2002 Geneva Risk Lecture
AbstractThe paper offers a proof that expected utility maximisation with logarithmic utility is a dominant preference in the biological selection process in the sense that a population following any other preference for decision-making under risk will, with a probability that approaches certainty, disappear relative to the population following this preference as time goes to infinity. The result is contrasted with Weber's and Fechner's Psychophysical Law which implies logarithmic sensation functions for objective physical stimuli. The Geneva Papers on Risk and Insurance Theory (2003) 28, 87–100. doi:10.1023/A:1026384519480
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal The Geneva Papers on Risk and Insurance Theory.
Volume (Year): 28 (2003)
Issue (Month): 2 (December)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Karni, Edi & Schmeidler, David, 1986. "Self-preservation as a foundation of rational behavior under risk," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 71-81, March.
- Sinn, Hans-Werner, 1985. "Psychophysical laws in risk theory," Journal of Economic Psychology, Elsevier, vol. 6(2), pages 185-206, June.
- Robson, Arthur J., 1996. "A Biological Basis for Expected and Non-expected Utility," Journal of Economic Theory, Elsevier, vol. 68(2), pages 397-424, February.
- Henry Allen Latane, 1959. "Criteria for Choice Among Risky Ventures," Journal of Political Economy, University of Chicago Press, vol. 67, pages 144.
- Mark Rubinstein., 1991. "Continuously Rebalanced Investment Strategies," Research Program in Finance Working Papers RPF-205, University of California at Berkeley.
- John Kagel & Raymond Battalio & Leonard Green, 1995. "Economic choice theory. an experimental analysis of animal behavior," Framed Field Experiments 00166, The Field Experiments Website.
- G? Rehme, 2004.
"Endogenous Policy and Cross-Country Growth Empirics,"
Econometric Society 2004 North American Summer Meetings
262, Econometric Society.
- Günther Rehme, 2011. "Endogenous Policy And Cross‐Country Growth Empirics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(2), pages 262-296, 05.
- Rehme, Günther, 2007. "Endogenous Policy and Cross-Country Growth Empirics," Darmstadt Discussion Papers in Economics 35720, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
- Rehme, Günther, 2007. "Endogenous (Re-)Distributive Policies and Economic Growth: A Comparative Static Analysis," Darmstadt Discussion Papers in Economics 35714, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If references are entirely missing, you can add them using this form.