Pascal’s and Tabarrok’s Wagers

In a recent paper A. Tabarrok [Believe in Pascal’s Wager? Have I Got a Deal for You!, Theory and Decision 48, 123--128, 2000] argued that a believer who accepts Pascal’s Wager should in addition accept payment of any given fee in return for a given increase in the probability of reaching God. However the conclusion is obtained from manipulations of infinities which are not valid in an expected utility model. In this note, an alternative model is formulated in which Tabarrok’s conclusion can be obtained.     

A Paretian liberal dilemma without collective rationality

This note proposes a principle of liberalism which is a simple and plausible variant of Sen's principle of minimal liberalism. The former principle is shown to be incompatible with the weak Pareto principle; and this impossibility result is not dependent on the preference-aggregating rule being restricted by any collective rationality condition.     

A paradox in decision theory and some experimental results: The relative nature of decisions

A simple two-choice single outcome valued decision under risk is presented which should show up the limitations in the classical approach of von Neumann, its extensions and its alternatives. An empirical testing of this hypothesis strongly supports this criticism. A rationale for explaining the apparent irrational decision is put forward and the case is made for understanding the relative nature of decision choices especially when multi-criteria are involved.     

De minimis and equity in risk

Indices and orderings are developed for evaluating alternative strategies in the management of risk. They reflect the goals of reducing individual and collective risks, of increasing equity, and of assigning priority to the reduction and to the equity of high risks. Individual risk is defined as the (random or non-random) level of exposure to a danger. In particular the role of a lower negligibility level is investigated. A class of indices is proposed which involves two parameters, a negligibility level and a parameter of inequality aversion, and several interpretations of the indices are discussed. We provide a set of eight axioms which are necessary and sufficient for this class of indices, and we present an approach to deal with partial information on the parameters.     

A μ-σ-Risk Aversion Paradox and Wealth Dependent Utility

We report a surprising property of --preferences: the assumption of nonincreasing relative risk aversion implies the optimal portfolio being riskless. We discuss a solution of that paradox using wealth dependent utility functions in detail. Using the revealed preference theory we show that (general, i.e. not necessary -) wealth dependent utility functions can be characterized by Wald's axiom.     

Comparative accuracy of value solutions in non-sidepayment games with empty core

This article reports a test of the predictive accuracy of solution concepts in cooperative non-sidepayment n-person games with empty core. Six solutions were tested. Three of these were value solutions (i.e., -transfer value, -transfer nucleolus, and -transfer disruption value) and three were equilibrium solutions (deterrence set, stable set, and imputation set). The test was based on a laboratory experiment utilizing 5-person, 2-choice normal form games with empty core; other related data sets were also analyzed. Goodness-of-fit results based on discrepancy scores show that the three value solutions are about equally accurate in predicting outcomes, and that all three are substantially more accurate than the other solutions tested.     

Expected utility, μ-σ preferences,and linear distribution classes: A further result

This article is an extension of Meyer and Sinn's results on the representation of arbitrary von Neumann-Morgenstern functions in - space when the probability distributions to be compared belong to a linear distribution class. It shows that, when absolute risk aversion decreases, stays constant, or increases not too fast, an increase in , given , increases the indifference curve slope: increased riskiness increases the required marginal compensation for risk when risk is measured by the standard deviation of wealth or income.I gratefully acknowledge useful comments by Wolfgang Buchholz, Kai Konrad, Jack Meyer, Hans Schneeweiß, Dominique Thon, and Bengt Arne Wickström.     

Any complete preference structure without circuit admits an interval representation

This article proves that all complete preference structures where the strict preference relation (P) has no circuit admit a representation by intervals of the real line; the rule for deciding whether an interval is indifferent or preferred to another is less straightforward than for interval orders: strict preference is indeed compatible with a certain degree of overlapping of intervals, the allowed degree being specified by means of a so-called tolerance function.     

Bribes,power, and managerial control in corporate voting games

Proxy fights have received comparatively little attention relative to the more popular methods for corporate control transfer: merger and tender offers. This paper presents an analytic model of the proxy contest as a cooperative game with four players: management, passive shareholders, insurgent shareholders and a trust fund. The power of the players and the effectiveness of certain managerial actions is discussed.