Criteria for Decision-Making under Risk and Uncertainty

Risk Preferences and the Poverty Trap: A Look at Technology Uptake amongst Smallholder Farmers in the Matzikama Municipality

A number of studies suggest the risk preference of low income individuals can result in behaviour that create conditions of sub optimal investment and thus persistent poverty. In this paper, we carry out a study with small-scale farmers in the Matzikama Municipality of the Western Cape, South Africa. We investigate how risk preference affect technology investment amongst small-scale farmers in developing countries.

Bayesian learning with multiple priors and non-vanishing ambiguity

The existing models of Bayesian learning with multiple priors by Marinacci (2002) and by Epstein and Schneider (2007) formalize the intuitive notion that ambiguity should vanish through statistical learning in an one-urn environment. Moreover, the multiple priors decision maker of these models will eventually learn the ‘'truth’'. To accommodate non vanishing violations of Savage’s (1954) sure-thing principle, as reported in Nicholls et al.

Who's Afraid of the Big Bad Wolf? Risk Aversion and Gender Discrimination in Assessment

This study exploits a natural experiment to evaluate the gender bias effect associated with negative marking due to gender-differentiated risk aversion. This approach avoids framing effects that characterize experimental evaluation of negative marking assessments. Evidence of a gender bias against female students is found. Quantile regressions indicate that female students in higher quantiles are substantially more adversely affected by negative marking.

The impact of statistical learning on violations of the sure-thing principle

This paper experimentally tests whether violations of Savage's (1954) subjective expected utility theory decrease if the ambiguity of an uncertain decision situation is reduced through statistical learning. Because our data does not show such a decrease, existing models which formalize ambiguity within an Anscombe-Aumann (1963) framework - thereby reducing to expected utility theory in the absence of ambiguity - are violated.

A decision-theoretic model of asset-price underreaction and overreaction to dividend news

We combine new developments in decision theory with a standard consumption-based asset-pricing framework. In our model the efficient market hypothesis is violated if and only if agents’ beliefs' express ambiguity about the stochastic process driving economic fundamentals. Asset price fluctuations result because agents with ambiguous beliefs are prone to a con…firmatory bias in the interpretation of new information. We demonstrate that our approach gives rise to price-patterns of “"underreaction" ”and “"overreaction" ”to news about dividend payments.

Do Bayesians learn their way out of ambiguity?

In standard models of Bayesian learning agents reduce their uncertainty about an event’s true probability because their consistent estimator concentrates almost surely around this probability’s true value as the number of observations becomes large. This paper takes the empirically observed violations of Savage’s (1954) sure thing principle seriously and asks whether Bayesian learners with ambiguity attitudes will reduce their ambiguity when sample information becomes large.

Risk Aversion: Experimental Evidence from South African Fishing Communities

We estimate the risk attitudes of a large sample of small-scale fishers from various fishing communities along the west coast of South Africa, using subjects’ choices over lotteries with real monetary prizes. We find that participants are moderately risk averse and that risk attitudes vary with certain socio-demographic variables. In particular, females are found to be more risk averse than their male counterparts, while quota holders are more risk loving. Logistic regression analysis indicates that risk attitudes have implications for non-compliance with fisheries regulation.

Indecisiveness aversion and preference for commitment

We present an axiomatic model of preferences over menus that is motivated by three assumptions. First, the decision maker is uncertain ex ante (i.e. at the time of choosing a menu) about her ex post (i.e. at the time of choosing an option within her chosen menu) preferences over options, and she anticipates that this subjective uncertainty will not resolve before the ex post stage. Second, she is averse to ex post indecisiveness (i.e. to having to choose between options that she cannot rank with certainty). Third, when evaluating a menu she discards options that are dominated (i.e.

Revisiting independence and stochastic dominance for compound lotteries

We establish mathematical equivalence between independence of irrelevant alternatives and monotonicity with respect to first order stochastic dominance. This formal equivalence result between the two principles is obtained under two key conditions. Firstly, for all , each principle is defined on the domain of compound lotteries with compoundness level . Secondly, the standard concept of reduction of compound lotteries applies. We establish mathematical equivalence between independence of irrelevant alternatives and monotonicity with respect to first order stochastic dominance.

Returns to Schooling: Skills Accumulation or Information Revelation?

This paper explores the degree to which imperfect information in the labour market regarding worker quality is likely to impact employment opportunities, as well as the wages associated with those opportunities. The primary purpose of this paper is to provide preliminary empirical evidence that market imperfections exist in South Africa's labour market, that those imperfections could be based on asymmetric private information, and that market participants pursue information gathering and revelation strategies to help mitigate the negative effects of the information asymmetries.

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