Game Theory and Mathematical Economics Research Seminar

 

Lecturer: 

Prof. David Dillenberger (UPenn)

Title: 

Caution and Reference Effects

Abstract: 

We introduce Cautious Utility, a new model based on the idea that individuals are unsure of trade-offs between goods and apply caution. The model yields an endowment effect, even when gains and losses are treated symmetrically. Moreover, it implies either loss aversion or loss neutrality for risk, but in a way unrelated to the endowment effect, and it captures the certainty effect, providing a novel unified explanation of all three phenomena. Cautious Utility can help organize empirical evidence, including some that directly contradict leading alternatives.

Location: 

Eilan Hall, Feldman Building, Second Floor, Edmond Safra Campus.

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