This paper investigates equilibria in a labor market where heterogeneous …rms post wage/tenure contracts and risk-averse workers, both employed and unemployed, search for new job opportunities. Di¤erent …rms, even those with the same productivity, typically o¤er di¤erent contracts. Equilibrium …nds workers never quit from higher productivity …rms to lower productivity …rms, but turnover is ine¢...

The paper discusses criteria for comparing risk aversion of decision makers when outcomes are multidimensional. A weak concept, ”commodity specific greater risk aversion”, is based on the comparison of risk premia paid in a specified commodity. A stronger concept, ”uniformly greater risk aversion” is based on the comparison of risk premia regardless of what commodities are used for payment. Nei...

T behavioral theory of the firm and prospect theory predict that performance below an aspiration level increases risk taking, but researchers also propose that performance below an aspiration level decreases risk taking. These conflicting predictions primarily hinge on whether decision makers perceive negative performance as a repairable gap or as a threat to firm survival. This study examines ...

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Given their reference point, most people tend to be risk averse over gains and risk seeking over losses. Therefore, they exhibit a dual risk attitude which is reference dependent. This paper considers an adaptive process for choice under risk such that, in spite of a permanent short-run dual risk attitude, the agent eventually learns to make risk neutral choices. The adaptive process is based o...

We investigate the outcome of bargaining when a player’s pay-off from agreement is risky. We find that a risk-averse player typically increases his equilibrium receipts when his pay-off is made risky. This is because the presence of risk makes individuals behave “more patiently” in bargaining. Strong analogies are drawn to the precautionary saving literature. We show that the effect of risk on ...

We analyze a competitive model in which different information signals get reflected in value at different points in time. If investors are sufficiently risk averse, we obtain an equilibrium in which all investors focus exclusively on the short term. In addition, we show that increasing the variance of informationless trading increases market depth but causes a greater proportion of investors to...