Background Risk and Small-Stakes Risk Aversion

N/A

Background Risk and Small-Stakes Risk Aversion∗ Xiaosheng Mu† Luciano Pomatto‡ Philipp Strack§ Omer Tamuz¶ March 7, 2021 Abstract We show that under plausible levels of background risk, no theory of choice under risk—such as expected utility theory, prospect theory, or rank dependent utility—can simultaneously satisfy the following three economic postulates: (i) Decision makers are risk-averse over small gambles, (ii) they respect stochastic dominance, and…

saved by

• Sydney Filler

related reading

• Existential_Risk_and_Growth.pdfphiliptrammell.com
• Risk aversion - EA Forumforum.effectivealtruism.org
• Regulation_7Nov25.pdfstatic1.squarespace.com
• Geometric Formalization of First-Order Stochastic Dominance in $N$ Dimensions: A Tractable Path to Multi-Dimensional Economic Decision Analysisarxiv.org
• Can risk aversion learned at low stakes generalize to astronomically high stakes?substack.com
• Musings on Trading — Castlecastle.tech
• The Framing of Decisions and the Psychology of Choicesites.stat.columbia.edu
• If You're Not First, You're (Maybe? Potentially? Probably?) Last0xsmac.substack.com
• The Logic of Risk Taking. A central chapter that crystallizes all… | by Nassim Nicholas Taleb | INCERTO | Mediummedium.com
• Risk aversion - Wikipediaen.wikipedia.org
• Comparison principle for stochastic heat equation on Rdmath.emory.edu
• How much should you pay for restaking security?arxiv.org