A Note on the Risk Behavior and Death of Homo Economicus
Recent papers by Cox and Sadiraj (2006) and Rubinstein (2006) have pointed out that expected utility theory is more general than has sometimes been acknowledged, and can hence not be refuted as easily by means of experiments. While acknowledging this fact, this note nevertheless demonstrates that typical risk experimental results are impossible to reconcile with conventional dynamic consumption theory under risk, where people are time consistent and integrate all sources of income perfectly.
|Date of creation:||01 Aug 2006|
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- Ariel Rubinstein, 2006.
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- Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
- Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
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"Small- and Large-Stakes Risk Aversion: Implications of Concavity Calibration for Decision Theory,"
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2006-03, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
- Cox, James C. & Sadiraj, Vjollca, 2006. "Small- and large-stakes risk aversion: Implications of concavity calibration for decision theory," Games and Economic Behavior, Elsevier, vol. 56(1), pages 45-60, July.
- Christian Gollier, 2004. "The Economics of Risk and Time," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262572249, December.
- Heinemann, Frank, 2005. "Measuring Risk Aversion and the Wealth Effect," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 156, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Matthew Rabin & Richard H. Thaler, 2001. "Anomalies: Risk Aversion," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 219-232, Winter.
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