We present a theoretical model to analyze the effects of two higher education loan schemes on individual schooling decisions, in a world where graduate earnings are stochastic. The paper is structured in two parts. The first part is static, we assume a single lifetime shock on graduate incomes and we compare the individual expected utilities under a mortgage loan (ML) and an income contingent l...

Consider a decision maker who faces a number of possible models of the world. Every model generates objective probabilities, but no probabilities of models are given. Applications of this framework include statistical decision making with model uncertainty, e.g. due to concerns for misspecification, or Robust Bayesian decision analysis. I characterize a number of decision rules including Bayesi...

In the context of the centipede game this paper discusses a solution concept for extensive games that is based on subgame perfection and uncertainty aversion. Players who deviate from the equilibrium path are considered nonrational. Rational players who face non-rational opponents face genuine uncertainty and may have non-additive beliefs about their future play. Rational players are boundedly ...

The theory of subjective expected utility has been recently extended to allow ambiguity to matter for choice. We propose a notion of absolute ambiguity aversion by building on a notion of comparative ambiguity aversion. We characterize it for a preference model which encompasses some of the most popular models in the literature. We next build on these ideas to provide a definition of unambiguou...

We study uncertainty averse preferences, that is, complete and transitive preferences that are convex and monotone. We establish a representation result, which is at same time general and rich in structure. Many objective functions commonly used in applications are special cases of this representation. JEL classification: D81

Committee decision making is examined in this study focusing on the role assigned to the committee members. In particular, we are concerned about the comparison between committee performance under specialization and non-specialization of the decision makers. JEL Classification number: D81, D71

The process of environmental regulation is usually a two-step one. In the first step, a standard for environmental quality is set. Then, in the second step, a regulatory mechanism is put in place to achieve the standard. In this paper I show how renewal theory can be used to set the quality standard optimally. JEL Classification: D81, Q20

Based on Jewitt (1986) we try to find a characterization of comparative downside risk aversion and love. The desired characterizations involve the decomposition of the dual of the intersection of two convexity cones. The decomposition holds in the case of downside risk love, but not in the case of downside risk aversion. A counterexample is provided. JEL Classification System: D81.

The concept of stability á la J. von Neumann and O. Morgenstern, which is composed of a pair of internal and external stability requirements, formalizes the idea of standard of behavior. This paper studies the decisiontheoretic foundation of stability, by establishing some epistemic conditions for a “stable” pattern of behavior in the context of strategic interaction. JEL Classification: C70, C...

We extend McDonald and Siegel’s (1986) model to the case where the expected rate of return of a project cannot be observed but is known to be either low or high. Waiting and observing the realizations of the value of the project provides information to the investor who can update her beliefs about the true value of the expected return. Moreover, the investor can purchase some additional informa...