Gains and losses. The same or different choices?
Arrangements (agreements, contracts, projects, etc.) are widespread economic events and are the fundamental concept of the economic theory. Infringements (breaches, modifications, changes, etc.) of arrangements are common and have a significant importance for the economic theory. For many years now the arrangement infringements have lacked appropriate attention in the economic theory. This fact caused a number of theoretical and practical problems. In order to solve them a new approach is proposed, which considers the possibility of arrangement infringements. The approach application in relation to choosing between risky and guaranteed outcomes is discussed. The article demonstrates the approach able to give the same results for both gains and losses. The concept of the space of “Anything can happen” is introduced. The article gives examples of practical application of the approach in relation to bank deposits, investments, business projects and international activities such as Millennium Dome-like projects and Olympiad-like projects.
References listed on IDEAS
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- William Goetzmann & Roger Ibbotson, 2005. "History and the Equity Risk Premium," Yale School of Management Working Papers ysm448, Yale School of Management.
- Massimo Egidi, 2005. "From Bounded Rationality to Behavioral Economics," Experimental 0507002, EconWPA.
- ALLARD, Marie & BRONSARD, Camille & GOURIÉROUX Christian, 2003.
Cahiers de recherche
2003-06, Universite de Montreal, Departement de sciences economiques.
- Carmela Di Mauro & Anna Maffioletti, 2004. "Attitudes to risk and attitudes to uncertainty: experimental evidence," Applied Economics, Taylor & Francis Journals, vol. 36(4), pages 357-372.
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- Quiggin, John, 2005.
"The Precautionary Principle in Environmental Policy and the Theory of Choice under Uncertainty,"
Risk and Sustainable Management Group Working Papers
149847, University of Queensland, School of Economics.
- John Quiggin, 2005. "The precautionary principle in environmental policy and the theory of choice under uncertainty," Murray-Darling Program Working Papers WPM05_3, Risk and Sustainable Management Group, University of Queensland.
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