Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 221: A Note on the Risk Behavior and Death of Homo Economicus
Olof Johansson-Stenman ()
Additional contact information
Olof Johansson-Stenman: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG
Abstract: Recent papers by Cox and Sadiraj (2006) and Rubinstein (2006) have pointed out that expected utility theory is more general than has sometimes been acknowledged, and can hence not be refuted as easily by means of experiments. While acknowledging this fact, this note nevertheless demonstrates that typical risk experimental results are impossible to reconcile with conventional dynamic consumption theory under risk, where people are time consistent and integrate all sources of income perfectly.
Keywords: The Rabin critique; expected utility of income; expected utility of final wealth; dynamic consumption theory; risk experiments; imperfect income integration; prospect theory
11 pages, August 1, 2006
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