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On the attitude to risk and the decision-making behavior

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  • Cocioc, Paul

Abstract

The paper is intended to be a synthesis of the general approaches on economic risk and economic decisions under risk. Delimitation of the risk from the uncertainty is based on Knight’s views. Basically decisions are analyzed in a conventional manner by using the expected utility hypothesis. The paradigm is presented both historycal and critically from Bernoulli to von Neumann and Morgenstern. It develops some ideas on the elements encountered in establishing the minimal acceptable level of outcomes for risk-taking. The comments and conclusions highlight certain limits on rationality in economic decision.

Suggested Citation

  • Cocioc, Paul, 2017. "On the attitude to risk and the decision-making behavior," MPRA Paper 83609, University Library of Munich, Germany, revised 2017.
    • Handle: RePEc:pra:mprapa:83609
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    File URL: https://mpra.ub.uni-muenchen.de/83609/1/MPRA_paper_83609.pdf
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    References listed on IDEAS

    as
    1. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    2. Samuelson, Paul A, 1977. "St. Petersburg Paradoxes: Defanged, Dissected, and Historically Described," Journal of Economic Literature, American Economic Association, vol. 15(1), pages 24-55, March.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    4. Rothschild, Michael & Stiglitz, Joseph E., 1971. "Increasing risk II: Its economic consequences," Journal of Economic Theory, Elsevier, vol. 3(1), pages 66-84, March.
    5. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56(4), pages 279-279.
    6. Machina, Mark J, 1987. "Choice under Uncertainty: Problems Solved and Unsolved," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 121-154, Summer.
    7. L. Eeckhoudt & C. Gollier & H. Schlesinger, 2005. "Economic and financial decisions under risk," Post-Print hal-00325882, HAL.
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    Cited by:

    1. Merlone, Ugo & Lupano, Matteo, 2022. "Third party funding: The minimum claim value," European Journal of Operational Research, Elsevier, vol. 296(2), pages 738-747.

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    More about this item

    Keywords

    risk; risk-aversion; uncertainty; decision-making; expected-utility hypothesis;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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