Third-generation prospect theory

We present a new theory of decision under uncertainty: third-generation prospect theory (PT³). This retains the predictive power of previous versions of prospect theory, but extends that theory by allowing reference points to be uncertain while decision weights are specified in a rank-dependent way. We show that PT³ preferences respect a state-conditional form of stochastic dominance. The theory predicts the observed tendency for willingness-to-accept valuations of lotteries to be greater than willingness-to-pay valuations. When PT³ is made operational by using simple functional forms with parameter values derived from existing experimental evidence, it predicts observed patterns of the preference reversal phenomenon.

Potential for Flexibility in EC Countries

Abstract. There are two economic reasons for supporting the Internal Market Programme of the EC by social policies: the fust argument refers to welfare theory, the second to policies of distribution. First, it could be possible that an economic integration without social completion will lead to welfare losses. Therefore, it could be necessary to correct market forces or to support them respectively because, due to market imperfections, they do not provide the best possible use of productive facilities. Second, it cannot be excluded that level and structure of social provisions will not be accepted because of superior aspects of policies of distribution. Market results could miss the aim of adjusting life and working conditions within the EC and developing them further. These two arguments mentioned above should be followed up in the discussion of the pros and cons of a harmonization of social systems in the EC. For the purposes of this paper these. rather fundamental considerations are applied to the following concrete items: dismissal protection, non-standard forms of employment, and working hours. These regulations influence numerical flexibility of enterprises, i.e. the possibilities of quantitative adjustments in staff use. The steadily growing competition in Europe will also increase the importance of flexibility potentials of enterprises in the different countries as a relevant factor for enterprise location. Extensive flexibility restrictions could prove to be competitive disadvantage in view of countries with more possibilities of flexibilization.Therefore, after the comparison of flexibility potentials in the EC-countries the implications for European laws (key-word: Social Charter) are to be discussed.     

Risk attitudes and digit ratio (2D:4D): Evidence from prospect theory

Journal of Risk and Uncertainty - Prenatal androgens have organizational effects on brain and endocrine system development, which may have a partial impact on economic decisions. Numerous studies...     

Environmental Influences on Well-Being: A Dyadic Latent Panel Analysis of Spousal Similarity

This article uses dyadic latent panel analysis (DLPA) to examine environmental influences on well-being. DLPA requires longitudinal dyadic data. It decomposes the observed variance of both members of a dyad into a trait, state, and an error component. Furthermore, state variance is decomposed into initial and new state variance. Total observed similarity between members of a dyad is decomposed into trait similarity, initial state similarity, new state similarity, and error similarity. Dyadic similarity in new state variance reveals that both members of a dyad change in the same direction, which is a strong indication of environmental effects. DLPA is used to examine environmental influences on life satisfaction and domain satisfaction based on 22 annual assessments of married couples in the German Socio-Economic Panel Study (N’s = 607–740). The results show high similarity in new state variance for life satisfaction and objectively identical domains (household income, housing), and less similarity for objectively less similar domains (recreation, health). This finding provides strong evidence for environmental influences on well-being. In addition, the results show high trait similarity. The implications of the latter finding for interpretation of behavioral genetics studies of well-being are discussed.     

Assessing physical activity in inpatient rehabilitation—sensor-based validation of the PAIR

Increased physical activity is positively associated with better health in community-dwelling older persons. It is unclear whether physical activity also influences success of inpatient rehabilitation. For the assessment of physical activity in inpatient rehabilitation the Physical Activity in Inpatient Rehabilitation Assessment (PAIR), a short questionnaire based on five questions, was developed and preliminary validated. In this study, the PAIR was validated against a sensor-based physical activity measurement. Seventy functionally impaired and cognitively mostly intact patients of a German geriatric inpatient rehabilitation clinic who had undergone hip surgery (n?=?62 women, median age?=?83 years) participated. Physical activity was measured using the PAIR and a sensor-based activity monitor (Physilog ®; BioAGM, CH). Assessments were conducted at admission (T1) and 2 weeks later (T2) during the rehabilitation process. To assess concurrent and predictive validity, Spearman correlations and linear regression models were calculated using sensor-based walking activity and uptime activity (walking and standing time) as dependent variables. Criterion-related concurrent validity using physical activity sensors was weak to moderate. Correlations were slightly higher at T2 (r?=?0.45-0.53) than at T1 (r?=?0.44-0.46). The objectively measured variance of physical activity, explained by the PAIR, ranged from 25 to 43 %. PAIR activity scores and sensor-based walking or total activity increased in a dose-dependent manner, confirming the scoring system of the PAIR. The application time was usually less than 2 min. The validity of the PAIR is weak to moderate when compared to a sensor-based activity monitor and comparable to existing physical activity assessments for community-dwelling older adults.     

Reliability of accelerometric measurement of physical activity in older adults-the benefit of using the trimmed sum

There is general consensus that physical activity is important for preserving functional capacities of older adults and positively influencing quality of life. While accelerometry is widely accepted and applied to assess physical activity in studies, several problems with this method remain (e.g., low retest reliability, measurement errors). The aim of this study was to test the intra-instrumental retest reliability of a wrist-worn accelerometer in a 3-day measurement of physical activity in older adults and to compare different estimators. A sample of 123 older adults (76.5?±?5.1?years, 59?% female) wore a uniaxial accelerometer continuously for 1?week. The data were split into two repeated measurement values (week set) of 3?days each. The sum, the 80?C99th quantiles and the 80?C99th trimmed sums were built for each week set. Retest reliability was assessed for each estimator and graphically demonstrated by Bland?CAltman plots. The intraclass correlation of the retest reliability ranged from 0.22 to 0.91. Retest reliability increases when a more robust estimator than the overall sum is used. Therefore, the trimmed sum can be recommended as a conservative estimate of the physical activity level of older adults.     

A critical note on the role of the capability approach for sustainability economics

Can sustainability economics profit from the fusion with Amartya Sen's capability approach, thereby gaining solid normative foundations and wider applicability? We argue that this fusion is mistaken to the extent that the capability approach is essentially a static normative framework while sustainability economics demands a systematic long-term view with focus on wide-ranging societal change. These demands are best realized by taking an evolutionary perspective that focuses on the evolution and development of societies.     

Allais for the poor: Relations to ability,information processing,and risk attitudes

This paper complements evidence on the Allais paradox from advanced countries and educated people by a novel investigation in a poor rural area. The share of Allais-type behavior is indeed high and related to indicators of “lacking ability,” such as poor education, unemployment, and little financial sophistication. Based on prospective reference theory, we extend these characteristics by biased processing of probabilistic information. Finally, we reveal that Allais-type behavior is linked to risk-related characteristics, such as risk tolerance and optimism. This indicates a potential problem as exactly the more dynamic among the poor tend to make inconsistent decisions under uncertainty.     

中德婚姻市场供需情况的比较研究

本文从概念、形成机制、度量方法、后果及其解决途径等方面探讨了婚姻挤压问题 ,考虑到婚姻挤压对婚姻寿命、初婚人数及其性别差异的影响而创立了婚姻寿命指数与初婚挤压指数两指标 ,提出了婚姻市场类型的划分标准。通过对中德两国婚姻市场的历史与现状的考察 ,揭示了中德两国婚姻挤压产生的原因、类型、差异和未来的变化趋势 ,并对如何化解中国未来婚姻市场的供求矛盾提出了对策与建议     

Income inequality and risk taking: the impact of social comparison information

Theory and Decision - In contrast to the assumptions of standard economic theory, recent experimental evidence shows that the income of peers has a systematic impact on observed degrees of risk...