First Order Loss Aversion and Optimal Consumption

2015 ◽  
Author(s):  
John G. Watson ◽  
Jason S. Scott
Keyword(s):  
Loss Aversion ◽  
Optimal Consumption ◽  
First Order

scholarly journals Cumulative prospect theory and deferred annuities

2019 ◽  
Vol 11 (3) ◽  
pp. 277-293 ◽  
Author(s):  
Anran Chen ◽  
Steven Haberman ◽  
Stephen Thomas
Keyword(s):  
Prospect Theory ◽  
Loss Aversion ◽  
Design Methodology ◽  
Behavioral Model ◽  
Cumulative Prospect Theory ◽  
Optimal Consumption ◽  
Content Type ◽  
Deferred Annuity ◽  
To Receive

Purpose Although it has been proved theoretically that annuities can provide optimal consumption during one’s retirement period, retirees’ reluctance to purchase annuities is a long-standing puzzle. The purpose of this paper is to use behavioral model to analyze the low demand for immediate annuities. Design/methodology/approach The authors employ cumulative prospect theory (CPT), which contains both loss aversion and probability transformations, to analyze the annuity puzzle. Findings The authors show that CPT can explain the unattractiveness of immediate annuities. It also shows that retirees would be willing to buy a long-term deferred annuity at retirement. By considering each component from CPT in turn, the loss aversion is found to be the major reason that stops people from buying an annuity while the survival rate transformation is an important factor affecting the decision of when to receive annuity incomes. Originality/value This paper identifies CPT as one of the reasons for the low demand of immediate annuities. It further suggests that long-term deferred annuities could overcome behavioral obstacles and become popular among retirees.

OPTIMAL PORTFOLIO AND CONSUMPTION MODELS UNDER LOSS AVERSION IN INFINITE TIME HORIZON

2016 ◽  
Vol 30 (4) ◽  
pp. 553-575 ◽  
Author(s):  
Jingjing Song ◽  
Xiuchun Bi ◽  
Shuguang Zhang
Keyword(s):  
Loss Aversion ◽  
Time Horizon ◽  
Optimization Problem ◽  
Optimal Portfolio ◽  
Reference Level ◽  
Optimal Consumption ◽  
Martingale Method ◽  
Infinite Time ◽  
Closed Form Solutions ◽  
Infinite Time Horizon

This paper investigates continuous-time optimal portfolio and consumption problems under loss aversion in an infinite time horizon. The investor's goal is to choose the optimal portfolio and consumption policies to maximize total discounted S-shaped utility from consumption. The problems are solved under two different situations respectively for the reference level: exogenous or endogenous. For the case of exogenous reference level, which is independent of the consumption policy, the optimal consumption policy and wealth process are obtained through the martingale method and replicating technique. For the case of endogenous reference level, which is related to the past actual consumption, the optimization problem with stochastic reference level is first transformed into an equivalent optimization problem with zero reference point, the corresponding relationship between them is proved, and then the relevant optimal consumption policy and wealth process are also obtained. When the investment opportunity sets are constants, the closed-form solutions of the portfolio and consumption policies are derived under two different situations respectively.

Dual systems for all: Higher-order, role-based relational reasoning as a uniquely derived feature of human cognition

2019 ◽  
Vol 42 ◽  
Author(s):  
Daniel J. Povinelli ◽  
Gabrielle C. Glorioso ◽  
Shannon L. Kuznar ◽  
Mateja Pavlic
Keyword(s):  
Temporal Reasoning ◽  
Higher Order ◽  
Important Case ◽  
Human Cognition ◽  
Relational Reasoning ◽  
Dual Systems ◽  
First Order ◽  
Reasoning System ◽  
Role Based

Abstract Hoerl and McCormack demonstrate that although animals possess a sophisticated temporal updating system, there is no evidence that they also possess a temporal reasoning system. This important case study is directly related to the broader claim that although animals are manifestly capable of first-order (perceptually-based) relational reasoning, they lack the capacity for higher-order, role-based relational reasoning. We argue this distinction applies to all domains of cognition.

Stochasting modeling of planetary ring systems

1984 ◽  
Vol 75 ◽  
pp. 461-469 ◽  
Author(s):  
Robert W. Hart
Keyword(s):  
Maximum Entropy ◽  
Ring System ◽  
The Sun ◽  
Ultimate State ◽  
Interparticle Interactions ◽  
Ring Systems ◽  
First Order ◽  
Planetary Ring ◽  
Insight Into

ABSTRACTThis paper models maximum entropy configurations of idealized gravitational ring systems. Such configurations are of interest because systems generally evolve toward an ultimate state of maximum randomness. For simplicity, attention is confined to ultimate states for which interparticle interactions are no longer of first order importance. The planets, in their orbits about the sun, are one example of such a ring system. The extent to which the present approximation yields insight into ring systems such as Saturn's is explored briefly.

Morphological studies of linear (AB)n multiblock copolymers and their blends

1992 ◽  
Vol 50 (1) ◽  
pp. 384-385
Author(s):  
Richard J. Spontak ◽  
Steven D. Smith ◽  
Arman Ashraf
Keyword(s):  
Electron Microscopy ◽  
Microphase Separation ◽  
Multiblock Copolymers ◽  
First Order ◽  
Morphological Studies ◽  
Transmission Electron ◽  
First Order Phase Transition ◽  
Covalently Bonded ◽  
Total Molecular Weight ◽  
First Order Phase

Block copolymers are composed of sequences of dissimilar chemical moieties covalently bonded together. If the block lengths of each component are sufficiently long and the blocks are thermodynamically incompatible, these materials are capable of undergoing microphase separation, a weak first-order phase transition which results in the formation of an ordered microstructural network. Most efforts designed to elucidate the phase and configurational behavior in these copolymers have focused on the simple AB and ABA designs. Few studies have thus far targeted the perfectly-alternating multiblock (AB)n architecture. In this work, two series of neat (AB)n copolymers have been synthesized from styrene and isoprene monomers at a composition of 50 wt% polystyrene (PS). In Set I, the total molecular weight is held constant while the number of AB block pairs (n) is increased from one to four (which results in shorter blocks). Set II consists of materials in which the block lengths are held constant and n is varied again from one to four (which results in longer chains). Transmission electron microscopy (TEM) has been employed here to investigate the morphologies and phase behavior of these materials and their blends.

Exact First Order Finite Element Modeling for Eddy Current NDE

1991 ◽  
Vol 3 (1) ◽  
pp. 235-253 ◽  
Author(s):  
L. D. Philipp ◽  
Q. H. Nguyen ◽  
D. D. Derkacht ◽  
D. J. Lynch ◽  
A. Mahmood
Keyword(s):  
Finite Element ◽  
Finite Element Modeling ◽  
Eddy Current ◽  
Element Modeling ◽  
First Order ◽  
Eddy Current Nde

Challenging the Multidimensional Conception of Perceived Person-Environment Fit

2020 ◽  
pp. 1-9
Author(s):  
Julian M. Etzel ◽  
Gabriel Nagy
Keyword(s):  
Higher Education ◽  
University Students ◽  
Educational Outcomes ◽  
Factor Model ◽  
Higher Order ◽  
Substantial Proportion ◽  
Unique Variance ◽  
First Order ◽  
Person Environment Fit ◽  
Order Factor

Abstract. In the current study, we examined the viability of a multidimensional conception of perceived person-environment (P-E) fit in higher education. We introduce an optimized 12-item measure that distinguishes between four content dimensions of perceived P-E fit: interest-contents (I-C) fit, needs-supplies (N-S) fit, demands-abilities (D-A) fit, and values-culture (V-C) fit. The central aim of our study was to examine whether the relationships between different P-E fit dimensions and educational outcomes can be accounted for by a higher-order factor that captures the shared features of the four fit dimensions. Relying on a large sample of university students in Germany, we found that students distinguish between the proposed fit dimensions. The respective first-order factors shared a substantial proportion of variance and conformed to a higher-order factor model. Using a newly developed factor extension procedure, we found that the relationships between the first-order factors and most outcomes were not fully accounted for by the higher-order factor. Rather, with the exception of V-C fit, all specific P-E fit factors that represent the first-order factors’ unique variance showed reliable and theoretically plausible relationships with different outcomes. These findings support the viability of a multidimensional conceptualization of P-E fit and the validity of our adapted instrument.

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