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The 1980s and 1990s have been a period of exciting new developments in the modelling of decision-making under risk and uncertainty. Extensions of the theory of expected utility and alternative theories of `non-expected utility' have been devised to explain many puzzles and paradoxes of individual and collective choice behaviour. This volume presents some of the best recent work on the modelling of risk and uncertainty, with applications to problems in environmental policy, public health, economics and finance. Eighteen papers by distinguished economists, management scientists, and statisticians shed new light on phenomena such as the Allais and St. Petersburg paradoxes, the equity premium puzzle, the demand for insurance, the valuation of public health and safety, and environmental goods.
Audience: This work will be of interest to economists, management scientists, risk and policy analysts, and others who study risky decision-making in economic and environmental contexts.
List of contents
I. Models of Environmental Risk.- Valuing Health and Safety: Some Economic and Psychological Issues.- Improving Efficiency in Environmental Enforcement.- Valuation of Environmental Goods: Frame Effects in the Estimation of Multi-Criteria Utility Functions.- Stochastic Trees and Medical Decision Making.- Manipulation of Emission Permit Markets.- II. Risk and Uncertainty in Economic Theory.- Allais Theory Offers Solution and Explanation for Equity Premium Puzzle.- Generalized Expected Utility and the Demand for Insurance: The Limits of Machina.- The Derivation of Generalized Expected Utility Expansions: Reply to Russell.- Necessary Conditions for Efficient Multiple-Bid Auctions.- Balanced Equilibrium: A Theory of Behavior in Games Based on Continuity and Insufficient Reason.- Mixed Extensions of Games and the St. Petersburg Paradox.- Consumption with Fluctuations in Preference.- III. Recent Progress in Modeling Preferences and Risk Attitudes.- Dynamically Consistent Preferences, Quadratic Beliefs, and Choice Under Uncertainty.- Induced Preferences and Decision Making Under Risk and Uncertainty.- On Socks, Ties, and Extended Outcomes.- Hierarchies and the Self-Control of Risk Attitude.- Allais Phenomena and Completeness of Preferences.- Representing Preference Relations with Nontransitive Indifference by a Single Real-Valued Function.
Summary
Eighteen papers by distinguished economists, management scientists, and statisticians shed new light on phenomena such as the Allais and St. Petersburg paradoxes, the equity premium puzzle, the demand for insurance, the valuation of public health and safety, and environmental goods.
