A Theory of the Gambling Effect

E. Diecidue, U. Schmidt, P.P. Wakker

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper presents a model for the "gambling effect," i.e., the effect that risky gambles are evaluated differently than riskless outcomes due to an intrinsic utility (or disutility) of gambling.The model turns out to violate stochastic dominance and therefore its primary applications will be descriptive. It sheds new light on empirical observations of risk attitudes and provides new insights into the distinction between risky and riskless utility.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages32
Volume2000-75
Publication statusPublished - 2000

Publication series

NameCentER Discussion Paper
Volume2000-75

Fingerprint

Gambling
Gambles
Risk attitude
Intrinsic
Stochastic dominance

Keywords

  • rank dependence
  • comonotonicity
  • Choquet integral
  • pessimism
  • uncertainty
  • aversion
  • prospect theory

Cite this

Diecidue, E., Schmidt, U., & Wakker, P. P. (2000). A Theory of the Gambling Effect. (CentER Discussion Paper; Vol. 2000-75). Tilburg: Microeconomics.
Diecidue, E. ; Schmidt, U. ; Wakker, P.P. / A Theory of the Gambling Effect. Tilburg : Microeconomics, 2000. (CentER Discussion Paper).
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Diecidue, E, Schmidt, U & Wakker, PP 2000 'A Theory of the Gambling Effect' CentER Discussion Paper, vol. 2000-75, Microeconomics, Tilburg.

A Theory of the Gambling Effect. / Diecidue, E.; Schmidt, U.; Wakker, P.P.

Tilburg : Microeconomics, 2000. (CentER Discussion Paper; Vol. 2000-75).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - A Theory of the Gambling Effect

AU - Diecidue, E.

AU - Schmidt, U.

AU - Wakker, P.P.

N1 - Pagination: 32

PY - 2000

Y1 - 2000

N2 - This paper presents a model for the "gambling effect," i.e., the effect that risky gambles are evaluated differently than riskless outcomes due to an intrinsic utility (or disutility) of gambling.The model turns out to violate stochastic dominance and therefore its primary applications will be descriptive. It sheds new light on empirical observations of risk attitudes and provides new insights into the distinction between risky and riskless utility.

AB - This paper presents a model for the "gambling effect," i.e., the effect that risky gambles are evaluated differently than riskless outcomes due to an intrinsic utility (or disutility) of gambling.The model turns out to violate stochastic dominance and therefore its primary applications will be descriptive. It sheds new light on empirical observations of risk attitudes and provides new insights into the distinction between risky and riskless utility.

KW - rank dependence

KW - comonotonicity

KW - Choquet integral

KW - pessimism

KW - uncertainty

KW - aversion

KW - prospect theory

M3 - Discussion paper

VL - 2000-75

T3 - CentER Discussion Paper

BT - A Theory of the Gambling Effect

PB - Microeconomics

CY - Tilburg

ER -

Diecidue E, Schmidt U, Wakker PP. A Theory of the Gambling Effect. Tilburg: Microeconomics. 2000. (CentER Discussion Paper).