Diminishing Marginal Utility of Wealth Cannot Explain Risk Aversion

By Matthew Rabin. 2000

147 citations recorded by the source corpus.

Subfields: Economics and Econometrics, Finance, General Decision Sciences

View Paper: https://www.semanticscholar.org/paper/0761f182777a728641a2cb6e9460924e356da573

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Citations in the corpus

Goals and plans in decision making (2007, background): “Many financial goals are perceived as deviations from the status quo, rather than as changes 9This argument is similar to that of Rabin (2000), which is set entirely in a frame of lotteries rather than insurance. in total assets.”
Narrow Bracketing and Dominated Choices (2009, unknown): “Rabin (2000a) formalizes a common intuition among researchers that the conventional diminishing-marginal-utility-of-wealth expected-utility model not only fails in systematic ways to empirically describe risk behaviors, but cannot even in theory provide a calibrationally plausible account of…”
HAPPINESS AND PUBLIC POLICY: A CHALLENGE TO (2006, background): “This is a fortunate finding, for as Rabin (2000) has shown, it would be impossible without it to explain why the same people can be risk-averse to small risks yet willing to undertake very large ones if the expected gain is high enough.”
Competition and Price Variation When Consumers Are Loss Averse (2008, background): “∗We are grateful to Marc Dudey, Ulrike Malmendier, Jörg Oechssler, Matthew Rabin, and Philipp Schmidt-Dengler for great suggestions. We also thank participants at seminars at Central European University and UC Berkeley, as well as the CEPR’s competition policy conference in Brussels (2005).”
Personality Psychology and Economics (2011, unknown): “As noted by Rabin (2000), the simple expected utility framework does not explain risk aversion over small stakes since it would imply an implausibly high curvature of the utility function.”
Anomalies: Risk Aversion (2001, unknown): “Table 1 provides a set of further examples based on the theorem in Rabin (2000).”
Making the implicit explicit: A look inside the implicit discount rate (2016, background): “Loss aversion helps resolve the criticism of expected utility put forward by Rabin and Thaler (2001) and Rabin (2000) who show that reasonable degrees of risk aversion for small and moderate investments (stakes) imply unreasonably high degrees of risk aversion for large stakes.”
Natural selection and the regulation of defenses: A signal detection analysis of the smoke detector principle. (2005, background): “One can also conclude that some defenses, such as anxiety, must be inexpensive compared with the harms that they protect against (Rabin, 2000).”