The classical risk-neutral newsvendor problem is to decide the order quantity to maximize the one period expected pro.t under a given demand distribution. In this paper we consider a risk-averse newsvendor with a stochastic price-dependent demand. We use the Conditional Value-at-Risk (CVaR), a risk measure commonly used in finance, as the decision criterion. The aim of our study is to investiga...

I study the welfare cost of business cycles in a complete-markets economy where some people are more risk averse than others. Relatively more risk-averse people buy insurance against aggregate risk, and relatively less risk-averse people sell insurance. These trades reduce the welfare cost of business cycles for everyone. Indeed, the least risk-averse people benefit from business cycles. Moreov...

Managers often lament that their employees are risk averse and do not take sufficient risks. While in some instances employees might in fact be too risk averse, we explore situations in which managers may incorrectly judge their employees to be overly risk averse or timid. In two studies, we find evidence of a timidity bias in evaluations--evaluators judge target decision makers to be risk aver...

People are sometimes risk-averse in gains but risk-loving in losses. Such behavior and other anomalies underlying prospect theory arise from a model of local status maximization in which consumers compare their wealth with other consumers of similar wealth. This social explanation shares key features with the psychological explanation offered by Kahneman and Tversky. JEL Classification: D81, D11

In cybersecurity, attackers range from brash, unsophisticated script kiddies and cybercriminals to stealthy, patient advanced persistent threats. When modeling these attackers, we can observe that they demonstrate different risk-seeking risk-averse behaviors. This work explores how an attacker’s risk seeking or averse behavior affects their operations against detection-optimizing defenders in I...

Crowd dynamics have constituted a hotspot of research in recent times, particularly areas where developmental progress has taken place crowd evacuation for ensuring human safety. In high-density events which happen frequently, panic or an emergency can lead to increase congestion may cause disastrous incidents. control planning via simulation people’s movement and behavior promote safe departur...

We report on a series of experiments that examine bidding behavior in first-price sealed bid auctions with symmetric and asymmetric bidders. To study the extent of strategic behavior, we use an experimental design that elicits bidders’ complete bid functions in each round (auction) of the experiment. In the aggregate, behavior is consistent with the basic equilibrium predictions for risk neutra...

This paper reviews the results from experimental measures of risk aversion for evidence of systematic differences in the behavior of men and women. In most studies, women are found to be more averse to risk than men. Studies with contextual frames show less consistent results. JEL Codes: C91, D81, J16

The objective of this paper is to clarify the interactive nature of the leader-follower relationship when both players are endogenously risk-averse. The analysis is placed in the context of a dynamic closed-loop Stackelberg game with private information. The case of a risk-neutral leader, very often discussed in the literature, is only a borderline possibility in the present study. Each player ...