Book chapter
Goals and the Organization of Choice under Risk in Both the Long Run and the Short Run
The Global Financial Crisis: Hidden Factors in the Meltdown, pp.226-239
Oxford University Press
2016
DOI: 10.1093/acprof:oso/9780199386222.003.0009
Abstract
Scholars have been working at explaining why people prefer sure things to risks for almost 300 years. The best-known early explanation, what we now call diminishing marginal utility, has provided a theoretical framework that continues to dominate both economic and psychological thinking. However, the utility notion has not been sufficient for describing risky choice, and its demonstrated failures have exposed other phenomena that also require explanation. Historically, there have been other approaches to explaining risky choice that date back equally as far and that also continue into the present day in fields such as agricultural economics and finance. This chapter focuses on showing how two of these approaches, the principles of safety first and of ruin avoidance, underlie the cognitive mechanisms that are revealed when the reasons for people’s choices under risk are studied directly.
Details
- Title: Subtitle
- Goals and the Organization of Choice under Risk in Both the Long Run and the Short Run
- Creators
- Lola Lopes
- Contributors
- Leslie Shaw (Editor)A. G Malliaris (Editor)Hersh Shefrin (Editor)
- Resource Type
- Book chapter
- Publication Details
- The Global Financial Crisis: Hidden Factors in the Meltdown, pp.226-239
- DOI
- 10.1093/acprof:oso/9780199386222.003.0009
- Publisher
- Oxford University Press; New York
- Number of pages
- 14
- Language
- English
- Date published
- 2016
- Academic Unit
- Management and Entrepreneurship ; Psychological and Brain Sciences
- Record Identifier
- 9984963193802771
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