Ellsberg’s experiment is extended to study the association between ambiguity aversion and violation of reduction of compound lotteries. It is shown that the two phenomena are strongly associated. Further analysis reveals two di¤erent forms of association, which correspond to alternative theoretical models that account for ambiguity attitudes. JEL Classi…cation: D81, C91.

For our experiment on corruption, we designed a coordination game to model the influence of risk attitudes, beliefs, and information on behavioral choices and determined the equilibria. We observed that the participants’ risk attitudes failed to explain their choices between corrupt and non-corrupt behavior. Instead, beliefs appeared to be a better predictor of whether or not they would opt for...

3 We integrate appealing features of Markowitz’s mean-variance portfolio theory (MVT) 4 and Shefrin and Statman’s behavioral portfolio theory (BPT) into a new mental accounting 5 (MA) framework. Features of the MA framework include an MA structure of portfolios, 6 a definition of risk as the probability of failing to reach the threshold level in each mental 7 account, and attitudes toward risk ...

OBJECTIVE To investigate the predictors of road traffic accidents (RTAs) in middle school students, a case-control study was designed to seek new clues for prevention and control on RTAs in this population. METHODS Cases were 116 students who experienced RTAs from 2005/01/01 to 2005/12/31. 116 students were served as controls who were from the same class of the cases and matched by age and se...

The present article examines two important effects that have been given scant attention in prior studies of variable risk strategies. The first effect, reference group sensitivity, is the degree to which decision makers’ aspirations are sensitive to their reference group. In this paper we compare the performances of decision makers with alternative levels of reference group sensitivity. Second,...

A simple duopoly model is used to show that the profits of both firms can rise under uncertainty if the aversions of the firms toward risk are not too asymmetric nor too pronounced. Unlike the competitive case, the assumptions of strategic substitutes and asymmetric risk attitudes can support equilibria in which one of the firms produce more under uncertainty than under certainty. We also show ...

Congestion games ignore the stochastic nature of resource delays and the risk-averse attitude of the players to uncertainty. To take these aspects into account, we introduce two variants of atomic congestion games, one with stochastic players, where each player assigns load to her strategy independently with a given probability, and another with stochastic edges, where the latency functions are...

Traditional inventory models focus on risk neutral decision makers, i.e., characterizing replenishment strategies that maximize expected total profit, or equivalently, minimize expected total cost over a planning horizon. In this paper, we propose a general framework for incorporating risk aversion in multi-period inventory models as well as multi-period models that coordinate inventory and pri...