Regret theory and risk attitudes
We examine risk attitudes under regret theory and derive analytical expressions for two components—the resolution and regret premiums—of the risk premium under regret theory. We posit that regret-averse decision makers are risk seeking (resp., risk averse) for low (resp., high) probabilities of gain...
| Autores: | , |
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| Tipo de recurso: | artículo |
| Fecha de publicación: | 2018 |
| País: | España |
| Institución: | IE |
| Repositorio: | Repositorio IE |
| OAI Identifier: | oai:repositorio.ie.edu:20.500.14417/3924 |
| Acceso en línea: | https://doi.org/10.1007/s11166-017-9268-9 https://hdl.handle.net/20.500.14417/3924 https://link.springer.com/article/10.1007/s11166-017-9268-9 |
| Access Level: | acceso abierto |
| Palabra clave: | Regret theory Resolution premium Regret premium Regret aversion 53 Ciencias Económicas::5307 Teoría económica ODS 4 - Educación de calidad |
| Sumario: | We examine risk attitudes under regret theory and derive analytical expressions for two components—the resolution and regret premiums—of the risk premium under regret theory. We posit that regret-averse decision makers are risk seeking (resp., risk averse) for low (resp., high) probabilities of gains and that feedback concerning the foregone option reinforces risk attitudes. We test these hypotheses experimentally and estimate empirically both the resolution premium and the regret premium. Our results confirm the predominance of regret aversion but not the risk attitudes predicted by regret theory; they also clarify how feedback affects attitudes toward both risk and regret. |
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