We consider bargaining situations where two players evaluate outcomes with reference-dependent utility functions, analyzing the effect of differing levels of loss aversion on bargaining outcomes. We find that as with risk aversion, increasing loss aversion for a player leads to worse outcomes for that player in bargaining situations. An extension of Nash's axioms is used to define a solution for bargaining problems with exogenous reference points. Using this solution concept we endogenize the reference points into the model (...) and find a unique solution giving reference points and outcomes that satisfy two reasonable properties, which we predict would be observed in a steady state. The resulting solution also emerges in two other approaches, a strategic (non-cooperative) approach using Rubinstein's (1982) alternating offers model and a dynamic approach in which we find that even under weak assumptions, outcomes and reference points converge to the steady state solution from any non-equilibrium state. (shrink)

If a doctor is trying to decide whether or not to provide a medical treatment, does it matter ethically whether that treatment has already been started? Health professionals sometimes find it harder to stop a treatment (withdraw) than to refrain from starting the treatment (withhold). But does that feeling correspond to an ethical difference? In this article, we defend equivalence—the view that withholding and withdrawal of treatment are ethically equivalent when all other factors are equal. We argue that preference for (...) withholding over withdrawal could represent a form of cognitive bias—withdrawal aversion. Nevertheless, we consider whether there could be circumstances in which there is a moral difference. We identify four examples of conditional nonequivalence. Finally, we reflect on the moral significance of diverging intuitions and the implications for policy. We propose a set of practical strategies for helping to reduce bias in end-of-life decision making, including the equivalence test. (shrink)

Daniel Ellsberg presented in Ellsberg (The Quarterly Journal of Economics 75:643–669, 1961) various examples questioning the thesis that decision making under uncertainty can be reduced to decision making under risk. These examples constitute one of the main challenges to the received view on the foundations of decision theory offered by Leonard Savage in Savage (1972). Craig Fox and Amos Tversky have, nevertheless, offered an indirect defense of Savage. They provided in Fox and Tversky (1995) an explanation of Ellsberg’s two-color problem (...) in terms of a psychological effect: ambiguity aversion . The ‘comparative ignorance’ hypothesis articulates how this effect works and explains why it is important to an understanding of the typical pattern of responses associated with Ellsberg’s two-color problem. In the first part of this article we challenge Fox and Tversky’s explanation. We present first an experiment that extends Ellsberg’s two-color problem where certain predictions of the comparative ignorance hypothesis are not confirmed. In addition the hypothesis seems unable to explain how the subjects resolve trade-offs between security and expected pay-off when vagueness is present. Ellsberg offered an explanation of the typical behavior elicited by his examples in terms of these trade-offs and in section three we offer a model of Ellsberg’s trade-offs. The model takes seriously the role of imprecise probabilities in explaining Ellsberg’s phenomenon. The so-called three-color problem was also considered in Fox and Tversky (1995). We argue that Fox and Tversky’s analysis of this case breaks a symmetry with their analysis of the two-color problem. We propose a unified treatment of both problems and we present a experiment that confirms our hypothesis. (shrink)

According to desire satisfactionism, well-being consists in getting what you desire. Recently, several theorists have suggested that this view should be extended to claim that ill-being consists in getting what you are averse to. I argue that both of these paradigmatic claims are false. As I show, desire and aversion are indeed both relevant to well-being and ill-being—in fact, perhaps surprisingly, each attitude has unique effects on both our well-being and ill-being. However, these effects are a matter of the (...) unique feelings desire and aversion produce. The paradigmatic desire satisfactionist approach—and, I argue, a surprisingly wide variety of desire satisfactionist views—cannot properly capture the relevance of these feelings, and thus the relevance of desire and aversion, to well-being and ill-being, and should therefore be abandoned. (shrink)

Engaging in self-narrative is often touted as a powerful antidote to the bad effects of illness. However, there are various examples of what may broadly be termed “aversion” to illness narrative. I group these into three kinds: aversion to certain types of illness narrative; aversion to illness narrative as a whole; and aversion to illness narrative as an essentially therapeutic endeavor. These aversions can throw into doubt the advantages claimed for the illness narrator, including the key (...) benefits of repair to the damage illness does to identity and life-trajectory. Underlying these alleged benefits are two key presuppositions: that it is the whole of one’s life that is narratively unified, and that one’s identity is inextricably bound up with narrative. By letting go of these assumptions, illness narrative advocates can respond to the challenges of narrative aversions. (shrink)

What we pay attention to is influenced by both reward learning and aversive conditioning. Although early attention tends to be biased toward aversively conditioned stimuli, sustained ignoring of such stimuli is also possible. How aversive conditioning influences how a person chooses to search, or the strategic control of attention, has not been explored. In the present study, participants learned an association between a colour and an aversive outcome during a training phase, and in a subsequent test phase searched for one (...) of two targets presented on each trial; one target was rendered in the aversively conditioned colour (CS+) and the other in a neutral colour (CS-). Given the distribution of colour stimuli in the search array, it was more optimal to search for and report a target in one of the two colours on some trials. Our results demonstrate that participants were biased away from the CS+ target, which resulted in non-optimal search on some trials. Surprisingly, rather than accentuate this bias, greater state anxiety was associated with a stronger tendency to find and report the CS+ target. Our findings have implications for our understanding of the learning-dependent control of attention and abnormal attentional biases observed in high-anxious individuals. (shrink)

Risk attitude is known to be a key determinant of various economic and financial choices. Behavioral studies that aim to evaluate the role of risk attitudes in contexts of this type, therefore, require tools for measuring individual risk tolerance. Recent developments in decision theory provide such tools. However, the methods available can be time consuming. As a result, some practitioners might have an incentive to prefer “fast and frugal” methods to clean but more costly methods. In this article, we focus (...) on a tractable procedure initially proposed by Holt and Laury (2002) to elicit risk attitude. We generalize this method to measure utility and risk aversion as follows. First, we allow measurement of probabilistic risk attitude through violations of expected utility due to probability weighting. Second, we use the outcome scale rather than the probability scale in the menu of choices. Third, we compare sure payoffs with lotteries instead of comparing non-degenerate lotteries. A within-subject experimental study illustrates the gains in tractability and bias minimization that can result from such an extension. (shrink)

We investigate risk attitudes when the underlying domain of payoffs is finite and the payoffs are, in general, not numerical. In such cases, the traditional notions of absolute risk attitudes, that are designed for convex domains of numerical payoffs, are not applicable. We introduce comparative notions of weak and strong risk attitudes that remain applicable. We examine how they are characterized within the rank-dependent utility model, thus including expected utility as a special case. In particular, we characterize strong comparative risk (...) aversion under rank-dependent utility. This is our main result. From this and other findings, we draw two novel conclusions. First, under expected utility, weak and strong comparative risk aversion are characterized by the same condition over finite domains. By contrast, such is not the case under non-expected utility. Second, under expected utility, weak comparative risk aversion is characterized by the same condition when the utility functions have finite range and when they have convex range. By contrast, such is not the case under non-expected utility. Thus, considering comparative risk aversion over finite domains leads to a better understanding of the divide between expected and non-expected utility, more generally, the structural properties of the main models of decision-making under risk. (shrink)

In multi-armed bandit problems, information acquired from experimentation is valuable because it tells the agent whether to select a particular option again in the future. This article tests whether people undervalue this information because they are ambiguity averse, or have a distaste for uncertainty about the average quality of each alternative. It is shown that ambiguity averse agents have lower than optimal Gittins indexes, appearing to undervalue information from experimentation, but are willing to pay more than ambiguity neutral agents to (...) learn the true mean of the payoff distribution, appearing to overvalue objectively given information. This prediction is tested with a laboratory experiment that elicits a Gittins index and a willingness to pay on six two-armed bandits. Consistent with the predictions of ambiguity aversion, the Gittins indexes are significantly lower than optimal and willingnesses to pay are significantly higher than optimal. (shrink)

Tolerance is generally regarded as an unqualified achievement of the modern West. Emerging in early modern Europe to defuse violent religious conflict and reduce persecution, tolerance today is hailed as a key to decreasing conflict across a wide range of other dividing lines-- cultural, racial, ethnic, and sexual. But, as political theorist Wendy Brown argues in Regulating Aversion, tolerance also has dark and troubling undercurrents. Dislike, disapproval, and regulation lurk at the heart of tolerance. To tolerate is not to (...) affirm but to conditionally allow what is unwanted or deviant. And, although presented as an alternative to violence, tolerance can play a part in justifying violence--dramatically so in the war in Iraq and the War on Terror. Wielded, especially since 9/11, as a way of distinguishing a civilized West from a barbaric Islam, tolerance is paradoxically underwriting Western imperialism. Brown's analysis of the history and contemporary life of tolerance reveals it in a startlingly unfamiliar guise. Heavy with norms and consolidating the dominance of the powerful, tolerance sustains the abjection of the tolerated and equates the intolerant with the barbaric. Examining the operation of tolerance in contexts as different as the War on Terror, campaigns for gay rights, and the Los Angeles Museum of Tolerance, Brown traces the operation of tolerance in contemporary struggles over identity, citizenship, and civilization. (shrink)

While agreeing with the main conclusion of Dominic Wilkinson and colleagues (Wilkinson, Butcherine, and Savulescu 2019), namely, that there is no moral difference between treatment withholding and withdrawal as such, we wish to criticize their approach on the basis that it treats the widespread acceptance of withdrawal aversion (WA) as a cognitive bias. Wilkinson and colleagues understand WA as “a nonrational preference for withholding (WH) treatment over withdrawal (WD) of treatment” (22). They treat WA as a manifestation of loss (...) aversion and refer to Kahneman and colleagues (1991), which defined this effect as follows: “the disutility of giving up an object is greater that the utility associated with acquiring it” (194). In a previous work, Wilkinson and Savulescu understood nonequivalence between treatment withholding and withdrawal as a reflection of slightly different, although related, phenomena: status quo bias or omission bias (Wilkinson and Savulescu 2012, 130–131). In neither of these two papers do they describe precisely the relation between these well-known psychological effects and WA, nor do they explain why they treat these effects as examples of nonrational preferences, despite the fact that these issues have been the subject of wide-ranging discussions on the intersection of psychology, economy, and philosophy. (shrink)

Desire comes in two kinds: attraction and aversion. But contemporary theories of desire have paid little attention to the distinction, and some philosophers doubt that it is psychologically real. I argue that one reason to think there is a difference between the attitudes, and to care about it, is that attractions and aversions contribute in radically different ways to our well-being. Attraction-motivated activity adds to the good life in a way that aversion-driven activity does not. I argue further (...) that the value of attraction-motivated activity is irreducible to the prudential value of pleasure or desire-satisfaction. Rather, it contributes in a distinctive way to the felt meaningfulness of life. In the end, I offer a hypothesis: when we are attracted to something, we see it as (noncomparatively) good; and it is only when we pursue the apparent good that we see ourselves as engaged with the type of value that makes our lives and the universe worth maintaining. (shrink)

The article presents an Internet experiment where subjects sequentially bid for basic gifts and binary-lotteries on these gifts in incentive compatible Vickrey auctions. Subjects exhibit uniformly pessimistic prize-weighting in spite of precautions to reduce suspicion and prohibit collusion. The bids for lotteries are close to the minimal payable value, even when the probability of obtaining a better prize is larger than 50%. Prize-weighting becomes even more conservative as the distance in value of payable prizes increases. The twofold aversive affect appears (...) for three distinct groups of students; we demonstrate, however, that the same subjects overweight small win-probabilities in standard binary-choice. (shrink)

This article presents the results of a survey designed to test, with economically sophisticated participants, Ellsberg’s ambiguity aversion hypothesis, and Smithson’s conflict aversion hypothesis. Based on an original sample of 78 professional actuaries (all members of the French Institute of Actuaries), this article provides empirical evidence that ambiguity (i.e. uncertainty about the probability) affect insurers’ decision on pricing insurance. It first reveals that premiums are significantly higher for risks when there is ambiguity regarding the probability of the loss. (...) Second, it shows that insurers are sensitive to sources of ambiguity. The participants indeed, charged a higher premium when ambiguity came from conflict and disagreement regarding the probability of the loss than when ambiguity came from imprecision (imprecise forecast about the probability of the loss). This research thus documents the presence of both ambiguity aversion and conflict aversion in the field of insurance, and discuses economic and psychological rationales for the observed behaviours. (shrink)

Critical race theorists and standpoint epistemologists argue that agents who are members of dominant social groups are often in a state of ignorance about the extent of their social dominance, where this ignorance is explained by these agents' membership in a socially dominant group (e.g., Mills 2007). To illustrate this claim bluntly, it is argued: 1) that many white men do not know the extent of their social dominance, 2) that they remain ignorant as to the extent of their dominant (...) social position even where this information is freely attainable, and 3) that this ignorance is due in part to the fact that they are white men. We argue that on Buchak's (2010, 2013) model of risk averse instrumental rationality, ignorance of one's privileges can be rational. This argument yields a new account of elite-group ignorance, why it may occur, and how it might be alleviated. (shrink)

Antisocial punishment—punishment of pro-social cooperators—has shown to be detrimental for the efficiency of informal punishment mechanisms in public goods games. The motives behind antisocial punishment acts are not yet well understood. This article shows that inequality aversion predicts antisocial punishment in public goods games with punishment. The model by Fehr and Schmidt (Q J Econ 114(3): 817–868, 1999) allows to derive conditions under which antisocial punishment occurs. With data from three studies on public goods games with punishment I evaluate (...) the predictions. A majority of the observed antisocial punishment acts are not compatible with inequality aversion. These results suggest that the desire to equalize payoffs is not a major determinant of antisocial punishment. (shrink)

We present an axiomatic model of preferences over menus that is motivated by three assumptions. First, the decision maker is uncertain ex ante (i.e., at the time of choosing a menu) about her ex post (i.e., at the time of choosing an option within her chosen menu) preferences over options, and she anticipates that this subjective uncertainty will not resolve before the ex post stage. Second, she is averse to ex post indecisiveness (i.e., to having to choose between options that (...) she cannot rank with certainty). Third, when evaluating a menu she discards options that are dominated (i.e., inferior to another option whatever her ex post preferences may be) and restricts attention to the undominated ones. Under these assumptions, the decision maker has a preference for commitment in the sense of preferring menus with fewer undominated alternatives. We derive a representation in which the decision maker’s uncertainty about her ex post preferences is captured by means of a subjective state space, which in turn determines which options are undominated in a given menu, and in which the decision maker fears, whenever indecisive, to choose an option that will turn out to be the worst (undominated) one according to the realization of her ex post preferences. (shrink)

The theoretical literature on vertical relationships usually assumes that beliefs about secret contracts take specific forms. In a recent paper, Eguia et al. (Games Econ Behav 109:465–483,2018) propose a new selection criterion that does not impose any restriction on beliefs. In this article, we extend their criterion by generalizing it to risk-averse retailers, and we show that risk aversion modifies the size of the belief subsets that support each equilibrium. We conduct an experiment which revisits that of Eguia et (...) al. (Games Econ Behav 109:465–483,2018). We design a new treatment effect on equilibrium selection depending on the retailers’ risk sensitivity. Experimental results confirm the treatment effect: the more sensitivity there is towards risk, the more the equilibrium played is consistent with passive beliefs. In addition, extending Eguia et al.’s (Games Econ Behav 109:465–483,2018) criterion to risk-averse retailers improves its predictive power on the equilibria played, especially for a population of retailers with moderate to extreme risk aversion. (shrink)

Women often experience novel food aversions and cravings during pregnancy. These appetite changes have been hypothesized to work alongside cultural strategies as adaptive responses to the challenges posed by pregnancy (e.g., maternal immune suppression). Here, we report a study that assessed whether data from an indigenous population in Fiji are consistent with the predictions of this hypothesis. We found that aversions focus predominantly on foods expected to exacerbate the challenges of pregnancy. Cravings focus on foods that provide calories and micronutrients (...) while posing few threats to mothers and fetuses. We also found that women who experience aversions to specific foods are more likely to crave foods that meet nutritional needs similar to those provided by the aversive foods. These findings are in line with the predictions of the hypothesis. This adds further weight to the argument that appetite changes may function in parallel with cultural mechanisms to solve pregnancy challenges. (shrink)

The veil of ignorance argument was used by John C. Harsanyi to defend Utilitarianism and by John Rawls to defend the absolute priority of the worst off. In a recent paper, Lara Buchak revives the veil of ignorance argument, and uses it to defend an intermediate position between Harsanyi's and Rawls' that she calls Relative Prioritarianism. None of these authors explore the implications of allowing that agent's behind the veil are averse to ambiguity. Allowing for aversion to ambiguity---which is (...) both the most commonly observed and a seemingly reasonable attitude to ambiguity---however supports a version of Egalitarianism, whose logical form is quite different from the theories defended by the aforementioned authors. Moreover, it turns out that the veil of ignorance argument neither supports standard Utilitarianism nor Prioritarianism unless we assume that rational people are insensitive to ambiguity. (shrink)

The twenty-first century has brought a renewed interest in democratic theory and practices, creating a complicated relationship between time-honoured democratic traditions and new forms of political participation. Reflecting on this interplay between tradition and innovation, Aletta J. Norval offers fresh insights into the global complexities of the formation of democratic subjectivity, the difficult emergence and articulation of political claims, the constitution of democratic relations between citizens and the deepening of our democratic imagination. Aversive Democracy draws inspiration from a critical engagement (...) with deliberative and post-structuralist models of democracy, whilst offering a distinctive reading inspired by contemporary work on the later Wittgenstein. This is a creative and insightful work which reorients democratic theory, elucidating the character of the commitments we engage in when we participate in democratic life together. (shrink)

The paper discusses Ralph Waldo Emerson’s thought in relation to the German Bildung tradition. For many, Bildung still signifies a valuable achievement of modern educational thought as well as a critical, emancipatory ideal which, frequently in a rather nostalgic manner, is appealed to in order to delineate problematic tendencies of current educational trends. Others, in an at times rather cynical manner, claim that Bildung through its successful institutionalization has shaped vital features of our present educational system and has thus served (...) its time and lost its critical potential. When thinking through Emerson’s variations on Bildung I argue against the nostalgic appeals to Bildung that the criticism against it has to be taken seriously. Against the cynical assessment of Bildung having run its course, I will hold that with Emerson we can develop the idea of an ‘aversive education’ as a call for Bildung to be turned upon itself, allowing to revive it as a conceptual tool for transformation, drawing particular attention to its political dimension. (shrink)

In the Gorgias, Plato has Polus ask Socrates if he would rather suffer injustice than perform it. Socrates’ response is justly famous, affirming a view that Polus himself finds incredible, and one that even contemporary readers find difficult to credit: “for my part, I would prefer neither, but if it had to be one or the other, I would choose to suffer rather than do what is unjust”. In this paper, we take up the part of Socrates’ response that Polus (...) never engages and that has also been completely neglected by contemporary scholars, namely, Socrates’ explicit aversion to being a victim of injustice. We show that this same aversion—though one not nearly as strong as his aversion to doing injustice—appears in several texts, and we argue that the best explanation of such an aversion derives from two important features of Socratic philosophy, both of which have only recently been recognized in Socratic scholarship: his virtue intellectualism, which conceives of virtue as a kind of craft that can be achieved in different degrees, and his conception of moral psychology, which allows for non-rational influences on how we perform the cognitive functions required for proper deliberation. (shrink)

This article argues that Lara Buchak’s risk-weighted expected utility (REU) theory fails to offer a true alternative to expected utility theory. Under commonly held assumptions about dynamic choice and the framing of decision problems, rational agents are guided by their attitudes to temporally extended courses of action. If so, REU theory makes approximately the same recommendations as expected utility theory. Being more permissive about dynamic choice or framing, however, undermines the theory’s claim to capturing a steady choice disposition in the (...) face of risk. I argue that this poses a challenge to alternatives to expected utility theory more generally. (shrink)

Diagnostic tests allow better informed medical decisions when there is uncertainty about a patient’s health status and, therefore, about the desirability to undertake treatment. This paper studies the relation between the expected value of diagnostic information and a patient's risk aversion. We show that the ex ante value of diagnostic information increases with risk aversion for diseases with low prevalence, but decreases with risk aversion for diseases with high prevalence. On the other hand, the ex post value (...) of diagnostic information always increases with the patient's degree of risk aversion. (shrink)

Maximum-likelihood updating is a well-known approach for extending static ambiguity sensitive preferences to dynamic set-ups. This paper develops an example in which MLU induces an ambiguity averse maxmin expected utility decision-maker to prefer a bet on an ambiguous over a risky urn and be more willing to bet on the ambiguous urn compared to an subjective expected utility decision-maker. This is challenging, since prior to observing draws from the urns, the MEU decision-maker actually preferred the risky over the ambiguous bet (...) and was less willing to bet on the ambiguous urn than the SEU decision-maker. The identified switch in betting preferences is not due to a violation of dynamic consistency or consequentialism. Rather, it results from MLU’s selection of extreme priors, causing a violation of the stability of set inclusion over the course of the updating process. (shrink)

Loss aversion can occur in riskless and risky choices. We present novel evidence on both in a non-student sample (660 randomly selected customers of a car manufacturer). We measure loss aversion in riskless choice in endowment effect experiments within and between subjects and find similar levels of average loss aversion in both. The subjects of the within study also participate in a simple lottery choice task which arguably measures loss aversion in risky choices. We find substantial (...) heterogeneity in both measures of loss aversion. Loss aversion in riskless choice and loss aversion in risky choice are strongly positively correlated, but on average riskless loss aversion is higher than risky loss aversion. We find that in both choice tasks, loss aversion increases in age, income, and wealth, and decreases in education. Our results provide novel supportive input to the debate about the reality of loss aversion. (shrink)

We study how the optimal contract in team production is a¤ected when employees are averse to inequity in the sense described by Fehr and Schmidt (1999). By designing a reward scheme that creates inequity o¤ the desired equilibrium, the employer can induce employees to perform e¤ort at a lower total wage cost than when they are not inequity averse. We also show that the optimal output choice might change when employees are inequity averse. Finally, we show that an employer can (...) gain, and never lose, by designing a contract that accounts for inequity aversion, even if employees have standard preferences. (shrink)

A moderately risk averse person may turn down a 50/50 gamble that either results in her winning $200 or losing $100. Such behaviour seems rational if, for instance, the pain of losing $100 is felt more strongly than the joy of winning $200. The aim of this paper is to examine an influential argument that some have interpreted as showing that such moderate risk aversion is irrational. After presenting an axiomatic argument that I take to be the strongest case (...) for the claim that moderate risk aversion is irrational, I show that it essentially depends on an assumption that those who think that risk aversion can be rational should be skeptical of. Hence, I conclude that risk aversion need not be irrational. (shrink)

I argue that, insofar as we endorse the general idea that desires play an important role in well-being, we ought to believe that their significance for well-being is derived from a pair of more fundamental attitudes: attraction and aversion. Attraction has wholly positive significance for well-being, and aversion has wholly negative significance for well-being. Desire satisfaction and frustration have significance for well-being insofar as the relevant desires involve some combination of attraction and aversion. I defend these claims (...) by illustrating how our desires can be asymmetrical. They can have greater positive than negative significance for well-being, or vice versa. (shrink)

Heath and Tversky (1991, Journal of Risk and Uncertainty 4:5–28) posed that reaction to ambiguity is driven by perceived competence. Competence effects may be inconsistent with ambiguity aversion if betting on own judgement is preferred to betting on a chance event, because judgemental probabilities are more ambiguous than chance events. This laboratory experiment analyses whether ambiguity affects prices and volumes in a double auction market, and contrasts ambiguity aversion to competence effects. In order to test for the presence (...) of competence effects, in the experiment uncertainty is tied to the realisation of events about which the decision maker is more or less knowledgeable. Two experiments are presented: in the first, knowledge is exogenous, whereas in the second the knowledge judgement is endogenous. Market prices provide evidence in favour of the competence hypothesis only when competence is self-assessed. Comparable volumes are observed in both experiments. (shrink)

In this paper, we discuss the transition from secure employment to risky self-employment caused by a small increase in wealth. Building on the apportioning risk literature, we prove that the transition from secure employment to risky entrepreneurship is based on a measure of the difference between the strength of downside risk aversion and the strength of risk aversion. This result highlights the idea that using the behavioral approach of risky lotteries to study entrepreneurship can produce different results from (...) the traditional economic theory of entrepreneurship, which can have policy implications that must be considered with caution. (shrink)

We consider a situation where an individual is facing an uncertain situation, but may costly alter his knowledge of the uncertainties. We study in this context how risk aversion may modify the individual search behavior. We consider a one-armed bandit problem (where one arm is safe and the other is risky) and study how the agent risk aversion can change the sequence of arms selected. The main result is that when the utility function is more concave, the agent (...) has more chances to select the safe arm. We also discuss how search is affected by risk aversion. (shrink)

Diverse lines of evidence point to a basic human aversion to physically harming others. First, we demonstrate that unwillingness to endorse harm in a moral dilemma is predicted by individual differences in aversive reactivity, as indexed by peripheral vasoconstriction. Next, we tested the specific factors that elicit the aversive response to harm. Participants performed actions such as discharging a fake gun into the face of the experimenter, fully informed that the actions were pretend and harmless. These simulated harmful actions (...) increased peripheral vasoconstriction significantly more than did witnessing pretend harmful actions or to performing metabolically-matched non-harmful actions. This suggests that the aversion to harmful actions extends beyond empathic concern for victim harm. Together, these studies demonstrate a link between the body and moral decision making processes. (shrink)

Philosophy and its descendents in the behavioral sciences have traditionally divided incentives into those that are sought and those that are avoided. Positive incentives are held to be both attractive and memorable because of the direct effects of pleasure. Negative incentives are held to be unattractive but still memorable (the problem of pain) because they force unpleasant emotions on an individual by an unmotivated process, either a hardwired response (unconditioned response) or one substituted by association (conditioned response). Negative incentives are (...) divided into those that are always avoided and those that are avoided only by higher mental processes—archetypically the passions, which are also thought of as hardwired or conditioned. Newer dichotomies within the negative have been proposed, hinging on whether a negative incentive is nevertheless sought (“wanted but not liked”) or on an incentive's being negative only because it is confining (the product of “rule worship”). The newer dichotomies have lacked motivational explanations, and there is reason to question conditioning in the motivational mechanism for the older ones.

Both experimental findings and the examination of common experience indicate that even the most aversive experiences, such as pain and panic, do not prevail in reflex fashion, but because of an urge to attend to them. The well-established hyperbolic curve in which prospective rewards are discounted implies a mechanism for such an urge, as well as for the “lower” incentives in the other dichotomies. The properties of these lower incentives are predicted by particular durations of temporary preferences on a continuum that stretches from fractions of a second to years. (shrink)

In this paper, we consider the composition of an optimal portfolio made of two dependent risky assets. The investor is first assumed to be a risk-averse expected utility maximizer, and we recover the existing conditions under which all these investors hold at least some percentage of their portfolio in one of the assets. Then, we assume that the decision maker is not only risk-averse, but also prudent and we obtain new minimum demand conditions as well as intuitively appealing interpretations for (...) them. Finally, we consider the general case of investor’s preferences exhibiting risk apportionment of any order and we derive the corresponding minimum demand conditions. As a byproduct, we obtain conditions such that an investor holds either a positive quantity of one of the assets or a proportion greater than 50 %. (shrink)

Can it be rational to be risk-averse? It seems plausible that the answer is yes—that normative decision theory should accommodate risk aversion. But there is a seemingly compelling class of arguments against our most promising methods of doing so. These long-run arguments point out that, in practice, each decision an agent makes is just one in a very long sequence of such decisions. Given this form of dynamic choice situation, and the (Strong) Law of Large Numbers, they conclude that (...) those theories which accommodate risk aversion end up delivering the same verdicts as risk-neutral theories in nearly all practical cases. If so, why not just accept a simpler, risk-neutral theory? The resulting practical verdicts seem to be much the same. In this paper, I show that these arguments do not in fact condemn those risk-aversion-accommodating theories. Risk aversion can indeed survive the long run. (shrink)

The research on the dark side of leadership is still in its infancy. We have contributed to this line of research by proposing that work alienation acts as an underlying mechanism through which aversive leadership results in reduced job performance. We further propose that psychological capital acts as an important personal resource that reduces the negative effects of aversive leadership in the form of work alienation. The proposed model gets its support from the conversation of resources theory given by Hobfoll (...) (1981) which suggests that stressful situation like an aversive leadership results in the loss of employee resources as a result of that he/she indulges in work alienation and shows poor job performance to retain back the lost resources. People with better personal resources in the form of psychological capital are better able to cope-up with the aversive leader behavior and make them able to avoid work alienation. It is a time-lagged study. The data for the current study was collected from 321 employees working in the service sector organizations, particularly universities, banks and telecom organizations, through personally administered questionnaires. The results supported the mediation and moderation hypothesis. Limitations and future research along with theoretical and practical implications are given at the end. (shrink)

We call a decision maker risk averse for losses if that decision maker is risk averse with respect to lotteries having alternatives below a given reference alternative in their support. A two-person bargaining solution is called invariant under risk aversion for losses if the assigned outcome does not change after correcting for risk aversion for losses with this outcome as pair of reference levels, provided that the disagreement point only changes proportionally. We present an axiomatic characterization of the (...) Nash bargaining solution based on this condition, and we also provide a decision-theoretic characterization of the concept of risk aversion for losses. (shrink)

A vast literature has developed probing the law's aversion to statistical/probability evidence in general and its rejection of naked statistical evidence in particular. This literature rests on false premises. At least so far as US law is concerned, there is no general aversion to statistical forms of proof and even naked statistics are admissible and sufficient for a verdict when the evidentiary proffer meets the normal standards of admissibility, the most important of which is reliability. The belief to (...) the contrary rests upon a series of mistakes: most importantly, mismodeling of the structure of legal systems and the nature of common law decision making. Contributing to these mistakes is the common methodology in this literature of relying on weird hypotheticals that mismodel the underlying legal relations and contain impossible epistemological demands. Collectively, these phenomena have distracted attention from issues that actually affect real legal systems. (shrink)

Most research on risk aversion in behavioral science with human subjects has focused on a component of risk aversion that does not adapt itself to context. More recently, studies have explored risk aversion adaptation to changing circumstances in sequential decision-making tasks. It is an open question whether one can identify evidence, at the single subject level, for such risk aversion adaptation. We conducted a behavioral experiment on human subjects, using a sequential decision making task. We developed (...) a model-based approach for estimating the adaptation of risk-taking behavior with single-trial resolution by modelling a subject’s goals and internal representation of task contingencies. Using this model-based approach, we estimated the subject-specific adaptation of risk aversion depending on the current task context. We found striking inter-subject variations in the adaptation of risk-taking behavior. We show that these differences can be explained by differences in subjects’ internal representations of task contingencies and goals. We discuss that the proposed approach can be adapted to a wide range of experimental paradigms and be used to analyze behavioral measures other than risk aversion. (shrink)