scholarly journals Expected Utility Analysis of Stocker Cattle Ownership Versus Contract Grazing in the Southeast

2004 ◽  
Vol 36 (3) ◽  
pp. 719-730 ◽  
Author(s):  
John D. Anderson ◽  
Curt Lacy ◽  
Charlie S. Forrest ◽  
Randall D. Little
Keyword(s):  
Stochastic Simulation ◽  
Expected Utility ◽  
Expected Returns ◽  
Risk Averse ◽  
Utility Analysis ◽  
Stocker Cattle

Stocker cattle ownership is compared to contract grazing using stochastic simulation. Returns are evaluated for both cattle owners and caretakers in contract grazing agreements. For caretakers, contract grazing is significantly less risky than cattle ownership. Slightly to moderately risk-averse caretakers could be expected to prefer some type of contract grazing to direct ownership of cattle. For cattle owners, contracting reduces risk only slightly while significantly reducing expected returns.

Expected utility analysis of infinite compound lotteries

2018 ◽  
Vol 48 (2) ◽  
pp. 112-138
Author(s):  
Jane Cullum ◽  
Natalia Nikolova ◽  
Kiril Tenekedjiev
Keyword(s):  
Expected Utility ◽  
Utility Analysis

scholarly journals FALSE CONSCIOUSNESS IN FINANCIAL MARKETS: OR IS IT IN IVORY TOWERS?

2013 ◽  
Vol 4 (1) ◽  
pp. 19-30
Author(s):  
Adi Schnytzer ◽  
Sara Westreich
Keyword(s):  
Risk Aversion ◽  
Financial Markets ◽  
Risk Index ◽  
Recent Model ◽  
Economic Index ◽  
Expected Returns ◽  
False Consciousness ◽  
Risk Averse ◽  
Different Levels ◽  
Negative Expectations

In general, models in finance assume that investors are risk averse. An example of such a recent model is the pioneering work of Aumann and Serrano, which presents an economic index of riskiness of gambles which is independent of wealth and holds (as might be understood from the adjective “economic”) for exclusively risk averse investors. In their paper, they discuss gambles with positive expected returns which will be accepted or rejected by agents which different levels of risk aversion. The question never asked by the authors (and in most of the finance literature) is: Who is offering these attractive gambles? To arrive at an answer, we extend the Aumann-Serrano risk index in such a way that it accommodates gambles with either positive or negative expectations and is thus suitable for both the risk averse and risk lovers.  Once we allow for the existence of risk lovers, it may be shown that in financial markets, many gambles with negative expectations are taken either knowingly or unknowingly so that there are always people that act as if they are risk lovers. The paper concludes with a brief discussion of the implications of our result, in particular that gambling is by no means restricted to the casino or the track.

Conventions, Operations, Predictions

2018 ◽  
pp. 193-214
Author(s):  
Ivan Moscati
Keyword(s):  
Expected Utility ◽  
Utility Theory ◽  
Choice Behavior ◽  
Expected Utility Theory ◽  
The Novel ◽  
Utility Analysis ◽  
Utility Measurement ◽  
The Third ◽  
Third Phase ◽  
Ordinal Utility

Chapter 12 analyzes the third phase of the debate on expected utility theory, from the end of 1952 to 1955. The issues concerning the nature of utility measurement gained an autonomous status in this phase. Milton Friedman, Leonard J. Savage, Robert Strotz, Armen Alchian, and Daniel Ellsberg argued that measuring utility consists of assigning numbers to objects by following a definite set of operations. While the particular way of assigning utility numbers to objects is largely arbitrary and conventional, the assigned numbers should allow economists to predict individuals’ choice behavior. This is similar to the operational conception advanced by psychologist Stanley Smith Stevens and definitively liberates utility measurement from its remaining ties with units and ratios. The novel view of measurement quickly became standard among mainstream utility theorists, and its success helps explain the peaceful cohabitation of cardinal and ordinal utility within utility analysis that began in the mid-1950s.

scholarly journals Behavioural factors in the financial decisions of young Mozambicans

2015 ◽  
Vol 46 (4) ◽  
pp. 11-22 ◽  
Author(s):  
J. H. Mota ◽  
A. C. Moreira ◽  
A. J. Cossa
Keyword(s):  
Expected Utility ◽  
Risk Taking ◽  
Standard Theory ◽  
Risk Averse ◽  
Rational Thinking ◽  
Behavioural Finance ◽  
Financial Decisions ◽  
The Future ◽  
Behavioural Factors ◽  
Finance Theory

This paper seeks to analyse how behavioural factors influence the financial decisions of young Mozambican investors. The standard theory of finance assumes investors make rational financial decisions, seeking to minimise risk and maximise their expected utility. However, several studies have been conducted criticizing the assumption that investors are rational, opening the way to behavioural finance theory. According to the behavioural finance approach, financial decisions made by individuals are not based on rational thinking and their risk taking behaviour depends on their beliefs or feelings. Our analysis reveals that young Mozambicans are risk averse towards certain gains and risk lovers when faced with certain losses; they are excessively optimistic about the future; they use the information available as an anchor for their estimates; and they are so overconfident that they believe estimates in uncertain situations to be more accurate than they really are.

scholarly journals Subprime Risk and Insurance with Regret

2010 ◽  
Vol 2010 ◽  
pp. 1-52 ◽  
Author(s):  
M. A. Petersen ◽  
J. Mukuddem-Petersen ◽  
M. P. Mulaudzi ◽  
B. de Waal ◽  
I. M. Schoeman
Keyword(s):  
Discrete Time ◽  
Rate Of Return ◽  
Risk Exposure ◽  
Expected Returns ◽  
Product Portfolio ◽  
Risk Averse ◽  
Subprime Mortgage ◽  
Mortgage Crisis ◽  
The Difference ◽  
Investment Choices

This paper investigates some of the risk and insurance issues related to the subprime mortgage crisis. The discussion takes place in a discrete-time framework with a subprime investing bank being considered to be regret and risk averse before and during the mortgage crisis, respectively. In particular, we investigate the bank's investment choices related to risky subprime structured mortgage products and riskless treasuries. We conclude that if the bank takes regret into account, it will be exposed to higher risk when the difference between the expected returns on subprime structured mortgage products and treasuries is small. However, there is low-risk exposure when this difference is high. Furthermore, we assess how regret can influence the bank's view of a rate of return guarantee from monoline insurers. We find that before the crisis, regret decreased the investment bank's preparedness to forfeit on returns when its structured product portfolio was considered to be safe. Alternatively, risk- and regret-averse banks forfeit the same returns when their structured mortgage product portfolio is considered to be risky. We illustrate the aforementioned findings about structured mortgage products and monoline insurance via appropriate examples.

scholarly journals Efficiency, equity, and social rationality under uncertainty

2021 ◽  
Author(s):  
Kaname Miyagishima
Keyword(s):  
Simple Model ◽  
Social Welfare ◽  
Expected Utility ◽  
Risk Preferences ◽  
Utility Functions ◽  
Subjective Expected Utility ◽  
Risk Averse ◽  
Social Rationality ◽  
Certainty Equivalents ◽  
Ex Post

AbstractIn a simple model where agents’ monetary payoffs are uncertain, this paper examines the aggregation of subjective expected utility functions which are interpersonally noncomparable. A maximin social welfare criterion is derived from axioms of efficiency, ex post equity, and social rationality, combined with the independence of beliefs and risk preferences in riskless situations (Chambers and Echenique in Games Econ Behav 76:582–595, 2012). The criterion compares allocations by the values of the prospects composed of the statewise minimum payoffs evaluated by the certainty equivalents. Because of this construction, the criterion is egalitarian and risk averse.

scholarly journals Profit-Driven Methodology for Servo Press Motion Selection under Material Variability

2021 ◽  
Vol 11 (20) ◽  
pp. 9530
Author(s):  
Nozomu Okuda ◽  
Luke Mohr ◽  
Hyunok Kim ◽  
Alex Kitt
Keyword(s):  
Logistic Regression ◽  
Bayesian Statistics ◽  
Expected Utility ◽  
High Strength Steels ◽  
High Strength ◽  
Expected Returns ◽  
Use Case ◽  
Servo Press ◽  
Bayesian Logistic Regression ◽  
Motion Profile

Servo presses enable new types of forming motion profiles that can be used to stamp difficult materials, such as high strength steels. This paper presents an application of Bayesian statistics to intelligently select which motion profile maximizes the expected utility given the properties of the incoming material. Bayesian logistic regression was used in conjunction with expected utility to estimate manufacturing returns, which can be used to make informed process decisions. A use case is presented, which demonstrates that the Smart Forming Algorithm can increase expected returns by more than 20%.

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