| 来源类型 | Discussion paper
|
| 规范类型 | 论文
|
| 来源ID | DP11929
|
| DP11929 Risk Aversion as a Perceptual Bias |
| Michael Woodford
|
| 发表日期 | 2017-03-22
|
| 出版年 | 2017
|
| 语种 | 英语
|
| 摘要 | The theory of expected utility maximization (EUM) explains risk aversion as due to diminishing marginal utility of wealth. However, observed choices between risky lotteries are difficult to reconcile with EUM: for example, in the laboratory, subjects' responses on individual trials involve a random element, and cannot be predicted purely from the terms offered; and subjects often appear to be too risk averse with regard to small gambles (while still accepting sufficiently favorable large gambles) to be consistent with any utility-of-wealth function. We propose a unified explanation for both anomalies, similar to the explanation given for related phenomena in the case of perceptual judgments: they result from judgments based on imprecise (and noisy) mental representation of the decision situation. In this model, risk aversion is predicted without any need for a nonlinear utility-of-wealth function, and instead results from a sort of perceptual bias --- but one that represents an optimal Bayesian decision, given the limitations of the mental representation of the situation. We propose a specific quantitative model of the mental representation of a simple lottery choice problem, based on other evidence regarding numerical cognition, and test its ability to explain the choice frequencies that we observe in a laboratory experiment. |
| 主题 | Monetary Economics and Fluctuations
|
| 关键词 | Weber's law
Diminishing sensitivity
Bayesian decision theory
Prospect theory
Rabin critique
|
| URL | https://cepr.org/publications/dp11929
|
| 来源智库 | Centre for Economic Policy Research (United Kingdom)
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/540741
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推荐引用方式
GB/T 7714 |
Michael Woodford. DP11929 Risk Aversion as a Perceptual Bias. 2017.
|
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