Document Type
Article
Publication Date
7-1-2012
Abstract
Prominent theories of decision under risk that challenge expected utility theory model risk attitudes at least partly with transformation of probabilities. This paper shows how attributing local risk aversion (partly or wholly) to attitudes towards probabilities can produce extreme probability distortions that imply paradoxical risk aversion.
Recommended Citation
Sadiraj, Vjollca, "Probabilistic Risk Attitudes and Local Risk Aversion: a Paradox" (2012). ExCEN Working Papers. 55.
https://scholarworks.gsu.edu/excen_workingpapers/55
COinS
Comments
To learn more about the Andrew Young School of Policy Studies and ExCEN Working Papers Series, visit https://aysps.gsu.edu/ and http://excen.gsu.edu/center/.