Exploring the Nature of Loss Aversion Loss aversion, the fact that losses have a greater impact than gains, is a fundamental property of behavioral accounts of choice. In this paper, we suggest four possible characterizations of the relative impact of losses and gains: (1) It could be a constant, such as the much cited value of 2, as in losses have twice the impact of gains. (2) It could be a s...

Opening the Black Box of Intra-Household Decision-Making: Theory and Non-Parametric Empirical Tests of General Collective Consumption Models We non-parametrically test a general collective consumption model with public consumption and externalities inside the household. We further propose a novel approach to model special cases of the general collective model. These special cases include altern...

This paper employs Quality Function Deployment (QFD) methodology to translate customer needs and requirements into the quality characteristics to improve quality for an existing product to develop a new consumer product. The traditional quality function deployment technique consists of six steps. The purpose of the first step is to measure the voice of the customer that reveals his/her needs an...

Assuming the classic contingent claim setting, a number of …nancial asset demand tests of Expected Utility have been developed and implemented in experimental settings. However the domain of preferences of these asset demand tests di¤er from the mixture space of distributions assumed in the traditional binary lottery laboratory tests of von Neumann-Morgenstern Expected Utility preferences. We d...

Economic Well-Being and Poverty among the Elderly: An Analysis Based on a Collective Consumption Model We apply the collective consumption model of Browning, Chiappori and Lewbel (2006) to analyse economic well-being and poverty among the elderly. The model focuses on individual preferences, a consumption technology that captures the economies of scale of living in a couple, and a sharing rule ...

This paper uses 2973 loan profile records of 2810 poor households who have taken these loans from different quasi-formal sources of which about 50 percent of the loan taken is supplied by the Ultra-poor oriented program designed by PKSF. The objective of this program was to create some income source for these Ultra-poor through credit support. But diversion of loan use from the proposed IGA to ...

The classical choice theory assumes that an individual’s choice does not depend on irrelevant alternatives or the way that alternatives are labeled; such as an endowment or a default. However, phenomena such as the “Status Quo Bias” and “Attraction Effect” which apparently imply violation of rationality, have been widely observed. Even though they exhibit similar pattern of choices, the relatio...

In this paper we consider the pricing of an American call option whose underlying asset dynamics evolve under the influence of two independent stochastic volatility processes of the Heston (1993) type. We derive the associated partial differential equation (PDE) of the option price using hedging arguments and Ito’s lemma. An integral expression for the general solution of the PDE is presented b...

The present paper thoroughly explores second-best efficient allocations in an adverse selection insurance economy. We start from a natural extension of the classical model, assuming less than perfect risk perceptions. We propose first and second welfare theorems, by means of which we describe efficiencyenhancing policies. Notions of weak and strong adverse selection are promising for interpreti...

This paper examines the determinants of household alcohol expenditures by using a nonnormal and heteroscedastic double-hurdle model to accommodate zero observations in the sample. The model is a generalization of the double-hurdle model estimated in previous studies of alcohol consumption. We also examine the effects of explanatory variables by calculating and decomposing the elasticities. Find...