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Essays On Economic Decisions Under Uncertainty
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Book Synopsis Essays on Economic Decisions Under Uncertainty by : Jacques Drèze
Download or read book Essays on Economic Decisions Under Uncertainty written by Jacques Drèze and published by CUP Archive. This book was released on 1990-05-25 with total page 460 pages. Available in PDF, EPUB and Kindle. Book excerpt: Professor Dreze is a highly respected mathematical economist and econometrician. This book brings together some of his major contributions to the economic theory of decision making under uncertainty, and also several essays. These include an important essay on 'Decision theory under moral hazard and state dependent preferences' that significantly extends modern theory, and which provides rigorous foundations for subsequent chapters. Topics covered within the theory include decision theory, market allocation and prices, consumer decisions, theory of the firm, labour contracts, and public decisions.
Book Synopsis Essays on Economic Decisions Under Uncertainty by : Jacques H. Dreze
Download or read book Essays on Economic Decisions Under Uncertainty written by Jacques H. Dreze and published by . This book was released on 1987 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Economic Decisions Under Uncertainty by : Jacques H. Drèze
Download or read book Essays on Economic Decisions Under Uncertainty written by Jacques H. Drèze and published by . This book was released on 1987 with total page 424 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :Dionne, Georges Publisher :Montréal : Dép. de science économique, Université de Montréal ISBN 13 : Total Pages :17 pages Book Rating :4.:/5 (189 download)
Book Synopsis Essays on Economic Decisions Under Uncertainty : a Review Article by : Dionne, Georges
Download or read book Essays on Economic Decisions Under Uncertainty : a Review Article written by Dionne, Georges and published by Montréal : Dép. de science économique, Université de Montréal. This book was released on 1988 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Social and Economic Factors in Decision Making under Uncertainty by : Kinga Posadzy
Download or read book Social and Economic Factors in Decision Making under Uncertainty written by Kinga Posadzy and published by Linköping University Electronic Press. This book was released on 2017-11-16 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: The objective of this thesis is to improve the understanding of human behavior that goes beyond monetary rewards. In particular, it investigates social influences in individual’s decision making in situations that involve coordination, competition, and deciding for others. Further, it compares how monetary and social outcomes are perceived. The common theme of all studies is uncertainty. The first four essays study individual decisions that have uncertain consequences, be it due to the actions of others or chance. The last essay, in turn, uses the advances in research on decision making under uncertainty to predict behavior in riskless choices. The first essay, Fairness Versus Efficiency: How Procedural Fairness Concerns Affect Coordination, investigates whether preferences for fair rules undermine the efficiency of coordination mechanisms that put some individuals at a disadvantage. The results from a laboratory experiment show that the existence of coordination mechanisms, such as action recommendations, increases efficiency, even if one party is strongly disadvantaged by the mechanism. Further, it is demonstrated that while individuals’ behavior does not depend on the fairness of the coordination mechanism, their beliefs about people’s behavior do. The second essay, Dishonesty and Competition. Evidence from a stiff competition environment, explores whether and how the possibility to behave dishonestly affects the willingness to compete and who the winner is in a competition between similarly skilled individuals. We do not find differences in competition entry between competitions in which dishonesty is possible and in which it is not. However, we find that due to the heterogeneity in propensity to behave dishonestly, around 20% of winners are not the best-performing individuals. This implies that the efficient allocation of resources cannot be ensured in a stiff competition in which behavior is unmonitored. The third essay, Tracing Risky Decision Making for Oneself and Others: The Role of Intuition and Deliberation, explores how individuals make choices under risk for themselves and on behalf of other people. The findings demonstrate that while there are no differences in preferences for taking risks when deciding for oneself and for others, individuals have greater decision error when choosing for other individuals. The differences in the decision error can be partly attributed to the differences in information processing; individuals employ more deliberative cognitive processing when deciding for themselves than when deciding for others. Conducting more information processing when deciding for others is related to the reduction in decision error. The fourth essay, The Effect of Decision Fatigue on Surgeons’ Clinical Decision Making, investigates how mental depletion, caused by a long session of decision making, affects surgeon’s decision to operate. Exploiting a natural experiment, we find that surgeons are less likely to schedule an operation for patients who have appointment late during the work shift than for patients who have appointment at the beginning of the work shift. Understanding how the quality of medical decisions depends on when the patient is seen is important for achieving both efficiency and fairness in health care, where long shifts are popular. The fifth essay, Preferences for Outcome Editing in Monetary and Social Contexts, compares whether individuals use the same rules for mental representation of monetary outcomes (e.g., purchases, expenses) as for social outcomes (e.g., having nice time with friends). Outcome editing is an operation in mental accounting that determines whether individuals prefer to first combine multiple outcomes before their evaluation (integration) or evaluate each outcome separately (segregation). I find that the majority of individuals express different preferences for outcome editing in the monetary context than in the social context. Further, while the results on the editing of monetary outcomes are consistent with theoretical predictions, no existing model can explain the editing of social outcomes.
Book Synopsis Essays on Economic Behavior Under Uncertainty by : Michael Balch
Download or read book Essays on Economic Behavior Under Uncertainty written by Michael Balch and published by North-Holland. This book was released on 1974 with total page 464 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Risk, Choice, and Uncertainty by : George G. Szpiro
Download or read book Risk, Choice, and Uncertainty written by George G. Szpiro and published by Columbia University Press. This book was released on 2020-01-07 with total page 413 pages. Available in PDF, EPUB and Kindle. Book excerpt: At its core, economics is about making decisions. In the history of economic thought, great intellectual prowess has been exerted toward devising exquisite theories of optimal decision making in situations of constraint, risk, and scarcity. Yet not all of our choices are purely logical, and so there is a longstanding tension between those emphasizing the rational and irrational sides of human behavior. One strand develops formal models of rational utility maximizing while the other draws on what behavioral science has shown about our tendency to act irrationally. In Risk, Choice, and Uncertainty, George G. Szpiro offers a new narrative of the three-century history of the study of decision making, tracing how crucial ideas have evolved and telling the stories of the thinkers who shaped the field. Szpiro examines economics from the early days of theories spun from anecdotal evidence to the rise of a discipline built around elegant mathematics through the past half century’s interest in describing how people actually behave. Considering the work of Locke, Bentham, Jevons, Walras, Friedman, Tversky and Kahneman, Thaler, and a range of other thinkers, he sheds light on the vast scope of discovery since Bernoulli first proposed a solution to the St. Petersburg Paradox. Presenting fundamental mathematical theories in easy-to-understand language, Risk, Choice, and Uncertainty is a revelatory history for readers seeking to grasp the grand sweep of economic thought.
Book Synopsis Affective Decision Making Under Uncertainty by : Donald J. Brown
Download or read book Affective Decision Making Under Uncertainty written by Donald J. Brown and published by Springer Nature. This book was released on 2020-12-18 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is an exploration of the ubiquity of ambiguity in decision-making under uncertainty. It presents various essays on behavioral economics and behavioral finance that draw on the theory of Black Swans (Taleb 2010), which argues for a distinction between unprecedented events in our past and unpredictable events in our future. The defining property of Black Swan random events is that they are unpredictable, i.e., highly unlikely random events. In this text, Mandelbrot’s (1972) operational definition of risky random unpredictable events is extended to Black Swan assets – assets for which the cumulative probability distribution or conditional probability distribution of random future asset returns is a power distribution. Ambiguous assets are assets for which the uncertainties of future returns are not risks. Consequently, there are two disjoint classes of Black Swan assets: Risky Black Swan assets and Ambiguous Black Swan assets, a new class of ambiguous assets with unpredictable random future outcomes. The text is divided into two parts, the first of which focuses on affective moods, introduces affective utility functions and discusses the ambiguity of Black Swans. The second part, which shifts the spotlight to affective equilibrium in asset markets, features chapters on affective portfolio analysis and Walrasian and Gorman Polar Form Equilibrium Inequalities. In order to gain the most from the book, readers should have completed the standard introductory graduate courses on microeconomics, behavioral finance, and convex optimization. The book is intended for advanced undergraduates, graduate students and post docs specializing in economic theory, experimental economics, finance, mathematics, computer science or data analysis.
Book Synopsis Essays in Decision Making Under Uncertainty and the Political Economy of Institutions by : Esteban Jose Mendez Chacon
Download or read book Essays in Decision Making Under Uncertainty and the Political Economy of Institutions written by Esteban Jose Mendez Chacon and published by . This book was released on 2019 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two lines of research. The first line focuses on decision making under uncertainty. Specifically, I analyze the nature of risk preferences in life-insurance choices, and I examine adverse selection and moral hazard in private-healthcare markets in a context where the government provides universal healthcare. The second line focuses on the political economy of institutions, and I study the impact of a multinational company on the economic development of its host country during and after its tenure. In Chapter 1, I estimate a structural model of risk preferences from the choice of insured amount in life-insurance contracts. The literature investigating life-insurance purchases has mostly focused on survey data to estimate how demand for insurance depends on demographic and socioeconomic factors, leaving aside the task of estimating an underlying model of decision making that generates this demand. Using proprietary data on life-insurance choices, I estimate a model of risky choice to explain households' decisions. My results indicate that, in addition to standard risk aversion (decreasing marginal utility for wealth), including decision weights that might differ from the actual probabilities improves the fit of the model. These weights can be interpreted as a combination of state-dependent utility and probability distortions. Moreover, I find support for the existence of heterogeneity in preferences. Women are more risk averse than men, and the decision weights vary depending on gender and age. In Chapter 2, we investigate adverse selection and moral hazard in private healthcare in markets where the government provides universal healthcare. We use proprietary data on health-insurance choices and medical expenditures to examine asymmetric information in this institutional setting. We disentangle adverse selection and moral hazard by leveraging variation in copays and deductibles implemented by the insurance company, and the fact that, for a sample of customers, the insured amount was exogenously assigned, shutting down the adverse selection channel. We find evidence for the presence of asymmetric information, both in the form of adverse selection and moral hazard. Moreover, we develop a model that incorporates sources of heterogeneity that could potentially explain selection in this institutional setting, namely risk aversion, risk type, concern for health, and taste for convenience services offered in the private healthcare sector. In Chapter 3, we analyze the impact of large-scale FDI on economic development by studying the case of the United Fruit Company (UFCo) in Costa Rica from 1889 to 1984. We implement a geographic regression discontinuity design that exploits a quasi-random assignment of land, and census data geo-referenced at the census-block level for 1973, 1984, 2000 and 2011. These allow us to identify the company's effect during its tenure, and after it stopped production. We find that former "UFCo lands" have had higher living standards and better economic outcomes than counterfactual areas without the company's presence, and that convergence is slow. These findings are validated using nighttime lights data. Detailed historical data suggest that the mechanisms behind our results are.
Book Synopsis ESSAYS ON ECONOMIC BEHAVIOR UNDER UNCERTAINTY- SELECTED PAPERS FROM A CONFERENCE- NSF-NBER CONFERENCE ON DECISION RULES AND UNCERTAINTY- NATIONAL SCIENCE FOUNDATION- NATIONAL BUREAU OF ECONOMIC RESEARCH. by :
Download or read book ESSAYS ON ECONOMIC BEHAVIOR UNDER UNCERTAINTY- SELECTED PAPERS FROM A CONFERENCE- NSF-NBER CONFERENCE ON DECISION RULES AND UNCERTAINTY- NATIONAL SCIENCE FOUNDATION- NATIONAL BUREAU OF ECONOMIC RESEARCH. written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays in Economics Under Uncertainty by : Konstantinos Serfes
Download or read book Essays in Economics Under Uncertainty written by Konstantinos Serfes and published by . This book was released on 1998 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Public Policy in an Uncertain World by : Charles F. Manski
Download or read book Public Policy in an Uncertain World written by Charles F. Manski and published by Harvard University Press. This book was released on 2013-02-14 with total page 218 pages. Available in PDF, EPUB and Kindle. Book excerpt: Manski argues that public policy is based on untrustworthy analysis. Failing to account for uncertainty in an uncertain world, policy analysis routinely misleads policy makers with expressions of certitude. Manski critiques the status quo and offers an innovation to improve both how policy research is conducted and how it is used by policy makers.
Book Synopsis Essays on Decision Making Under Uncertainty by : Masaki Miyashita
Download or read book Essays on Decision Making Under Uncertainty written by Masaki Miyashita and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies several economic questions related to decision making under uncertainty. In the first chapter, I consider the question of to what extent an external observer can infer the underlying information structure by observing an equilibrium action distribution in an incomplete information game. I investigate this issue in a general linear-quadratic-Gaussian framework. A simple class of canonical information structures is offered and proves rich enough to rationalize any possible equilibrium action distribution that can arise under an arbitrary information structure. I show that the class is parsimonious in the sense that the relevant parameters can be uniquely pinned down by an observed equilibrium outcome, up to some qualifications. This implies, for example, that the accuracy of each agent's signal about the state is identified, as measured by how much observing the signal reduces the state variance. Moreover, I show that a canonical information structure characterizes the lower bound on the amount by which each agent's signal can reduce the state variance, across all observationally equivalent information structures. The lower bound is tight, for example, when the actual information structure is uni-dimensional, or when there are no strategic interactions among agents, but in general, there is a gap since agents' strategic motives confound their private information about fundamental and strategic uncertainty.The second chapter is based on my joint work with Federico Echenique, Yuta Nakamura, Luciano Pomatto, and Jamie Vinson. We propose a model of incomplete preferences, termed twofold multiprior preferences, in which an act f is ranked above an act g only when f provides higher utility in a worst-case scenario than what g provides in a best-case scenario. The model explains the experimental phenomenon, called failures of contingent reasoning, captured through a weakening of the state-by-state monotonicity (or dominance) axiom. Our model gives rise to rich comparative statics results, which demonstrate that the two important decision criteria in the literature--subjective expected utility representation and obvious dominance--can be encapsulated as the respective extreme cases of our model. We present an application to second-price auctions and illustrate that our model can explain a wide array of anomalistic bidding behaviors caused by failures of contingent reasoning, yet it can provide sharper predictions than obvious dominance.The third chapter, coauthored with Carlo Cusumano, extends the analysis of the second chapter by studying a general class of twofold preferences that compare different acts based on two possibly different utility functions. We find that the twofold preferences are useful for analyzing economic problems for at least two reasons. From a behavioral perspective, it enables theoretical models to account for the indecisiveness of a decision maker's choice in a way depending on the scale of odds. From a modeling perspective, the twofold approach can be a unified framework for modeling various incomplete preferences that differ in additional independence-type axioms to be imposed. Our series of axiomatization results provide the characterizations of the incomplete counterparts of existing complete preferences in the literature.
Book Synopsis Three Essays on Investment Under Uncertainty by : Gaurav Atreyi Kankanhalli
Download or read book Three Essays on Investment Under Uncertainty written by Gaurav Atreyi Kankanhalli and published by . This book was released on 2020 with total page 199 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this dissertation, I explore how economic agents conduct their investment decisions under uncertainty. Each of the three chapters empirically tests predictions from real-options frameworks of investment under uncertainty, shedding light on novel dimensions of agents' investment responses to uncertainty. In the first chapter, I study how the startup ecosystem responds to uncertainty. In the second chapter, I empirically measure the international transmission of uncertainty by examining US firms' investment responses to uncertainty induced by the 2016 Brexit Referendum. In the third chapter, I examine how uncertainty affects not only the level, but also the composition, of firms' capital stock using data on global shipping firms' investment and disinvestment decisions. Chapter 1 shows that economic uncertainty boosts dynamism among US startups. I introduce news- and survey-based measures of startup-relevant uncertainty and find that uncertainty is associated with net firm creation, and net job creation among young firms. I identify the channel by demonstrating, in a real-options framework, that venture capitalists (VCs) adjust their portfolios to take advantage of uncertainty. In contrast to mature firms delaying investment when facing uncertainty, VCs increase their investment spending during periods of heightened uncertainty, but do so by funding a large number of startups at low valuations. Critically, these dynamics play out solely at the earliest funding stages, implying greater experimentation by VCs. Buoyed by increased VC funding, startups accelerate their investment in technology and labor, producing more innovation and gaining greater traction. Looking at eventual outcomes, I provide evidence that startups receiving funding during high uncertainty periods are more likely to either fail or have exits with high multiples. My results point to uncertainty playing an important role in spurring "creative destruction" by stimulating risky startup activity in the economy. Chapter 2 (joint with Murillo Campello, Gustavo S. Cortes, and Fabricio D'Almeida) shows that the 2016 Brexit Referendum led American corporations to cut jobs and investment within US borders. Using establishment-level data, we document that these effects were modulated by the degree of reversibility of capital and labor. American job losses were particularly pronounced in industries with less skilled and more unionized workers. UK-exposed firms with less redeployable capital and high input-offshoring dependence cut investment the most. Data on the near-universe of US establishments also point to measurable, negative effects on establishment turnover (openings and closings). Our results demonstrate how foreign-born political uncertainty is transmitted across international borders, shaping domestic capital formation and labor allocation. Chapter 3 (joint with Murillo Campello and Hyunseob Kim) studies how economic uncertainty affects corporate asset composition and productivity using near-universe data on shipping firms' new orders, secondary-market transactions, and demolition of ships. Using a real-options framework, we show that shipping firms curtail both the acquisition and disposal of ships in response to heightened uncertainty. Critically, this mechanism operates primarily through cuts in new ship orders and demolition of older vessels -- decisions that are harder to reverse vis-a-vis deals in the used ship market. We use the escalation in Somali pirate attacks from 2009-2011 as a plausibly exogenous shock to uncertainty and find consistent results. The dynamics we identify are more pronounced when secondary ship markets are less liquid, as firms face stronger incentives to delay their decisions. Our results are novel in showing that uncertainty hampers "creative destruction" among mature firms in which these firms adopt technological innovation emobdied in newer capital and dispose of old-vintage capital.
Book Synopsis Gravitational Lenses by : Rainer Kayser
Download or read book Gravitational Lenses written by Rainer Kayser and published by . This book was released on 1992 with total page 399 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays in the Theory of Risk-bearing by : Kenneth Joseph Arrow
Download or read book Essays in the Theory of Risk-bearing written by Kenneth Joseph Arrow and published by . This book was released on 1974 with total page 296 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Market and Professional Decision-making Under Risk and Uncertainty by : Erick Davidson
Download or read book Market and Professional Decision-making Under Risk and Uncertainty written by Erick Davidson and published by . This book was released on 2007 with total page 107 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This dissertation explores decision making under risk and uncertainty by professionals and markets composed of professionals. Both essays use empirical data from some of the most competitive economic environments imaginable. The first essay looks at market prices resulting from the sum of both professional and lay choices while the second analyzes the individual choices of professional gamblers. Both essays propose a theoretical framework to not just positively identify what professionals do, but also prescribe normatively what they should do. In both cases, the two are found to be different. The first essay, Market Response to Risk and Uncertainty, 2004 Hurricane Forecasts, develops a simple function to explain insurance losses from hurricanes as a function of short-term forecasts. After demonstrating the accuracy of the function in explaining 2004 insurance claims, the remainder of the essay looks at the stock market's use of these forecasts in pricing insurer and US economy risk. Despite causing billions in damages, both hurricanes and hurricane forecasts are found to have only marginal impacts on financial markets. Surprisingly, markets fail to make efficient use of hurricane forecasts in pricing both insurer and general market exposure to hurricane risk. A potential explanation for market inefficiency around hurricane information is that, like researchers, financial actors may be confounding uncertainty for unpredictability. The second essay, Know When to Hold'em, examines a specific decision within a highly popular, high-stakes version of poker. Like financial markets analyzed in the first essay, professional gamblers must make risky decisions with uncertain probabilities of success. Gamblers are found to be both overly conservative in their choices and overly confident in their abilities to predict uncertain outcomes. A simple statistical model that generalizes across situations to form a naïve probability of having the best cards, is found to be as effective in decision making as players' true expectations of winning. Additionally, a dynamic theoretical model is presented in order to show professional divergence from risk-neutral expected profit maximization in the credit constrained world of tournament poker. Interestingly the value function, derived from this model, is equivalent to an optimal stock price of a poker player.
