Handbook of the economics of risk and uncertainty. / by Mark Machina, W. Kip Viscusi.

Author/creator Machina, Mark J.
Other author Viscusi, W. Kip.
Format Electronic
PublicationOxford : Elsevier, [2014]
Copyright Date©2014
Description1 online resource (897 pages)
Supplemental ContentProQuest Ebook Central
Subjects
Risk.
Uncertainty.

Contents Half Title; Title; Copyright; Contents; contributors; Preface 1; Preface 2; 1 Uncertainty, Always With Us, But Not Always Recognized by Economists; 2 Ignorance; 3 Group Decision; 4 Unanticipated Themes; 5 A Final Word; References; Introduction; 1 Axiomatic Foundations of Expected Utility and Subjective Probability; 1.1 Introduction; 1.1.1 Decision Making in the Face of Uncertainty and Subjective Probabilities: Interpretations and Methodology; 1.1.2 A Brief History; 1.1.3 Belief Updating: Bayes' Rule; 1.1.4 The Analytical Framework; 1.2 Expected Utility Under Risk.
Contents 1.2.1 The Analytical Framework; 1.2.2 The Characterization of the Preference Relations; 1.2.3 Representation; 1.2.4 Strong Continuity and Expected Utility Representation for Borel Probability Measures; 1.3 Expected Utility Under Uncertainty and Subjective Probabilities; 1.3.1 Savage's Analytical Framework; 1.3.2 The Preference Structure; 1.3.3 Subjective Expected Utility Representation; 1.3.4 The Model of Anscombe and Aumann; 1.3.5 Wakker's Model; 1.3.6 Beliefs and Probabilities; 1.3.7 State-Dependent Preferences; 1.4 Bayesian Decision Theory and the Representation of Beliefs.
Contents 1.4.1 The Analytical Framework; 1.4.2 Preferences on Strategies and their Representation; 1.4.3 Action-Dependent Subjective Probabilities on S; 1.5 Expected Utility Theory with Incomplete Preferences; 1.5.1 Expected Multi-Utility Representation Under Risk; 1.5.2 Expected Multi-Utility Representation Under Uncertainty; 1.5.2.1 Special Cases; 1.6 Conclusion; Acknowledgments; References; 2 Rationality and Dynamic Consistency Under Risk and Uncertainty; 2.1 Introduction and Outline; 2.1.1 Purpose of Chapter; 2.1.2 The Expected Utility (or EU) Hypothesis; 2.1.3 Paradoxes; 2.1.4 Non-Expected Utility.
Contents 2.1.5 Chapter Outline; 2.2 Static Rationality with Deterministic Consequences; 2.2.1 Preferences in Consumer Theory; 2.2.2 Consequence Choice Functions; 2.2.3 Base Preference Relations; 2.2.4 Arrow's Conditions for Ordinality; 2.2.5 Experimental Tests of Ordinality; 2.2.5.1 Background; 2.2.5.2 Two-Dimensional Choice Problems; 2.2.5.3 The Attraction Effect; 2.2.5.4 The Compromise Effect; 2.2.5.5 Attempted Explanations; 2.3 Static Rationality with Risky Consequences; 2.3.1 The Mixture Space of Risky Roulette Lotteries; 2.3.2 The Expected Utility Hypothesis.
Contents 2.3.3 Implications of the Expected Utility Hypothesis; 2.3.3.1 Utility Transformations; 2.3.3.2 Von Neumann-Morgenstern Independence; 2.3.3.3 Archimedean Continuity; 2.3.4 Jensen's Three Axioms; 2.3.5 Experimental Tests; 2.3.5.1 Preference Reversal under Risk; 2.3.5.2 The Allais Paradox; 2.3.5.3 The Common Consequence Effect; 2.3.5.4 The Common Ratio Effect; 2.4 Dynamic Rationality with Deterministic Consequences; 2.4.1 Dynamic Inconsistency; 2.4.1.1 Naïve Behavior; 2.4.1.2 Sophisticated Behavior; 2.4.1.3 Commitment Devices; 2.4.2 Example: A Strict Preference Cycle and the Potential Addict.
Abstract The need to understand the theories and applications of economic and finance risk has been clear to everyone since the financial crisis, and this collection of original essays proffers broad, high-level explanations of risk and uncertainty. The economics of risk and uncertainty is unlike most branches of economics in spanning from the individual decision-maker to the market (and indeed, social decisions), and ranging from purely theoretical analysis through individual experimentation, empirical analysis, and applied and policy decisions. It also has close and sometimes conflicting relations.
Bibliography noteIncludes bibliographical references and index.
Source of descriptionOnline resource; title from PDF title page (ebrary, viewed December 16, 2013).
Genre/formElectronic books.
Genre/formElectronic books.
ISBN9780444536860 (e-book)
ISBN0444536868 (e-book)

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