Risk Taking with Additive and Multiplicative Background risks. We examine the effects of background risks on optimal portfolio choice. Examples of background risks include uncertain labor income, uncertainty about the terminal value of fixed assets such as housing and uncertainty about future tax liabilities. While some of these risks are additive and have been amply studied, others are multipl...

Article history: Received 17 April 2011 Received in revised form 20 November 2012 Accepted 23 April 2013 Available online xxxx

This paper extends the research about the impact of an increase in background risk from cases with one decision variable to those with two decision variables. We apply the results of Eeckhoudt and Kimball (1992) to examine the comparative statics of an increase in background risk on demand for loss reduction that depends on market insurance and self-insurance together. We find that individuals ...

A continuous-time sequential job search model with savings and CARA preferences is solved analytically without resorting to unlimited borrowing and real-valued consumption. I isolate the effects of limited borrowing and nonnegative consumption as well as risk-aversion on the reservation wage by using a system of ordinary differential equations.

We estimate 11 well-studied behavioral phenomena in a group of 190 laboratory subjects (short-term discount rates, small stakes risk aversion, present bias, loss aversion, the endowment effect, aversion to ambiguity and compound lotteries, the common ratio and common consequence effects and sender/receiver behavior in trust games). We study the joint distribution of these behaviors and compare ...

The impact of gifts on deposit balances and customer satisfaction was examined in a longitudinal field experiment conducted at a commercial bank. Gifts increased deposit balances, survey response rates, and customer satisfaction compared to the no-gift control. Several factors were manipulated within the gift treatment: gift type, the accompanying message, and the sequence of gift value, which ...