BACKGROUND Risk aversion is associated with many important decisions among younger and middle aged persons, but the association of risk aversion with decision making has not been well studied among older persons who face some of the most significant decisions of their lives. METHOD Using data from 606 community-dwelling older persons without dementia from the Rush Memory and Aging Project, an...

Adults and children are willing to sacrifice personal gain to avoid both disadvantageous and advantageous inequity. These two forms of inequity aversion follow different developmental trajectories, with disadvantageous inequity aversion emerging around 4 years and advantageous inequity aversion emerging around 8 years. Although inequity aversion is assumed to be specific to situations where res...

This paper presents an axiomatic characterization of preferences which allow ambiguity aversion. It is assumed that decision makers treat risky lotteries and ambiguous lotteries separately, with preferences governed by the von Neumann-Morgenstern axioms for risk and a variant of the Savage axioms for ambiguity. These axioms imply that the decision maker chooses among risks according to expected...

Ivanova-Stenzel and Salmon (2004a) established some interesting yet puzzling results regarding bidders’ preferences between auction formats. The finding is that bidders strongly prefer the ascending to the first price sealed bid auction on a ceteris paribus basis but they are not willing to pay up to an entry price for entering into an ascending auction instead of a first price that would equal...

Since optimal investment strategies generally cannot be obtained in closed form when utility functions exhibit non-constant risk aversion, most dynamic investment studies have focused on the constant risk aversion case. The present paper investigates a general class of dynamic investment models with fmal-period expected wealth objective for which the fmal-period utility of wealth function is no...

In five experiments with rats we examined the aversion established by consumption of a solution of lithium chloride (LiCl). Experiment 1 showed that consumption of LiCl established an aversion to saline (NaCl). Experiment 2 showed that the size of the aversion was reduced in rats given pre-exposure to saline (a latent inhibition effect). Experiment 3 showed that experience of a sucrose-saline c...

This paper analyses conditions for an increase in an additive independent background risk to increase an agent’s risk aversion (incremental risk vulnerability). We, first, present a necessary and sufficient condition on an agent’s utility function for a simple mean preserving spread in background risk to increase the agent’s risk aversion. Gollier and Pratt (1996) have shown that declining and ...

Concepts of constant absolute risk aversion and constant relative risk aversion have proved useful in the analysis of choice under uncertainty, but are quite restrictive, particularly when they are imposed jointly. A generalization of constant risk aversion, referred to as invariant risk aversion is developed. Invariant risk aversion is closely related to the possibility of representing prefere...

Gender Differences in Risk Aversion and Ambiguity Aversion This paper demonstrates gender differences in risk aversion and ambiguity aversion. It also contributes to a growing literature relating economic preference parameters to psychological measures by asking whether variations in preference parameters among persons, and in particular across genders, can be accounted for by differences in pe...

This paper is the first to apply prospect theory to societal health-related decision making. In particular, we allow for utility curvature, equity weighting, sign-dependence, and loss aversion in choices concerning quality of life of other people. We find substantial inequity aversion, both for gains and losses, which can be attributed to both diminishing marginal utility and differential weigh...