Resource title

Risk preferences and transaction costs

Resource image

image for OpenScout resource :: Risk preferences and transaction costs

Resource description

Kahneman and Tversky have collected evidence of behavior in the face of risk which is seemingly at odds with von Neumann-Morgenstern expected utility theory. To account for their observations they propose a new approach which they christen ‘Prospect Theory’. This note argues that introducing transactions costs into expected utility theory systematically accounts for many empirical results without unduly straining the conventional analysis. It may therefore be premature to abandon expected utility theory.

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

Resource resource URL

http://eprints.lse.ac.uk/35523/

Resource license