|
on Utility Models and Prospect Theory |
| By: | Benno Torgler; Markus Schaffner; Bruno S. Frey; Sascha L. Schmidt; Uwe Dulleck |
| Abstract: | The experimental literature and studies using survey data have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. Individuals are concerned about social comparisons. However, behavioral evidence in the field is rare. This paper provides an empirical analysis, testing the model of inequality aversion using two unique panel data sets for basketball and soccer players. We find support that the concept of inequality aversion helps to understand how the relative income situation affects performance in a real competitive environment with real tasks and real incentives. |
| Keywords: | Inequality aversion; relative income; positional concerns; envy; social comparison; performance; interdependent preferences |
| JEL: | D00 D60 L83 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2008-18&r=upt |
| By: | Alessandro Innocenti |
| Abstract: | Before Kahneman and Tversky showed how behavioural economics could bring psychology and economics into a unified framework, in the 1950s a social psychologist, Sidney Siegel, entered the realm of economics and laid the foundation of experimental economics. This paper gives an assessment of Siegel’s overall contribution and claims that Siegel was not only a pioneer of experimental economics but also of behavioural economics. Had his view on the integration of psychology and economics been more promptly received, it might have triggered a different and more successfully path to the injection of greater realism in economics. When Siegel died, his approach to integrate psychology and economics lost its main advocate. Although his legacy was paramount in the work of the Nobel Prize Vernon Smith, Siegel endorsed a quite different approach to how make interdisciplinary research effective. |
| Keywords: | economics, psychology, behavioural economics, bargaining theory, utility theory. |
| JEL: | B20 B30 C70 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:usi:depfid:0808&r=upt |
| By: | Lahiri, Somdeb |
| Abstract: | In this paper we consider choice correspondences which may be empty-valued. We study conditions under which such choice correspondences are rational, transitively rational, partially rational, partially almost transitive rational, partially almost quasi-transitive rational. |
| Keywords: | choice correspondence; rational; almost transitive; almost quasi-transitive |
| JEL: | D71 C61 |
| Date: | 2008–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10860&r=upt |
| By: | Jessica Wachter |
| Abstract: | This paper introduces a model in which the probability of a rare disaster varies over time. I show that the model can account for the high equity premium and high volatility in the aggregate stock market. At the same time, the model generates a low mean and volatility for the government bill rate, as well as economically significant excess stock return predictability. The model is set in continuous time, assumes recursive preferences and is solved in closed-form. It is shown that recursive preferences, as well as time-variation in the disaster probability, are key to the model's success. |
| JEL: | G12 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14386&r=upt |