Disappointment aversion in tournaments

2021 ◽  
Author(s):  
Yaoyao Wu
Keyword(s):  
Disappointment Aversion

scholarly journals The Nature of Risk Preferences: Evidence from Insurance Choices

2013 ◽  
Vol 103 (6) ◽  
pp. 2499-2529 ◽  
Author(s):  
Levon Barseghyan ◽  
Francesca Molinari ◽  
Ted O'Donoghue ◽  
Joshua C Teitelbaum
Keyword(s):  
Loss Aversion ◽  
Structural Model ◽  
Marginal Utility ◽  
Unobserved Heterogeneity ◽  
Risky Choice ◽  
Probability Weighting ◽  
Disappointment Aversion ◽  
Diminishing Marginal Utility ◽  
Standard Risk ◽  
Small Probabilities

We use data on insurance deductible choices to estimate a structural model of risky choice that incorporates “standard” risk aversion (diminishing marginal utility for wealth) and probability distortions. We find that probability distortions—characterized by substantial overweighting of small probabilities and only mild insensitivity to probability changes—play an important role in explaining the aversion to risk manifested in deductible choices. This finding is robust to allowing for observed and unobserved heterogeneity in preferences. We demonstrate that neither Kőszegi-Rabin loss aversion alone nor Gul disappointment aversion alone can explain our estimated probability distortions, signifying a key role for probability weighting. (JEL D14, D81, G22)

scholarly journals An explicit representation for disappointment aversion and other betweenness preferences

2020 ◽  
Vol 15 (4) ◽  
pp. 1509-1546
Author(s):  
Simone Cerreia-Vioglio ◽  
David Dillenberger ◽  
Pietro Ortoleva
Keyword(s):  
Functional Equation ◽  
Expected Utility ◽  
General Result ◽  
Explicit Representation ◽  
Implicit Representation ◽  
Utility Representation ◽  
Disappointment Aversion

One of the most well known models of non‐expected utility is Gul's (1991) model of disappointment aversion. This model, however, is defined implicitly, as the solution to a functional equation; its explicit utility representation is unknown, which may limit its applicability. We show that an explicit representation can be easily constructed, using solely the components of the implicit representation. We also provide a more general result: an explicit representation for preferences in the betweenness class that also satisfy negative certainty independence (Dillenberger 2010) or its counterpart. We show how our approach gives a simple way to identify the parameters of the representation behaviorally and to study the consequences of disappointment aversion in a variety of applications.

Model Risk and Disappointment Aversion

2018 ◽  
Author(s):  
Hasan A Fallahgoul ◽  
Loriano Mancini ◽  
Stoyan Veselinov Stoyanov
Keyword(s):  
Model Risk ◽  
Disappointment Aversion
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