Outside options and risk attitude
Fuente:
arXiv
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| Auteurs principaux: | , , |
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| Format: | Preprint |
| Publié: |
2025
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| _version_ | 1866918143466668032 |
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| author | Curello, Gregorio Sinander, Ludvig Whitmeyer, Mark |
| author_facet | Curello, Gregorio Sinander, Ludvig Whitmeyer, Mark |
| contents | We uncover a close link between outside options and risk attitude: when a decision-maker gains access to an outside option, her behaviour becomes less risk-averse, and conversely, any observed decrease of risk-aversion can be explained by an outside option having been made available. We characterise the comparative statics of risk-aversion, delineating how effective risk attitude (i.e. actual choice among risky prospects) varies with the outside option and with the decision-maker's 'true' risk attitude. We prove that outside options are special: among transformations of a decision problem, those that amount to adding an outside option are the only ones that always reduce risk-aversion. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2509_14732 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Outside options and risk attitude Curello, Gregorio Sinander, Ludvig Whitmeyer, Mark Theoretical Economics We uncover a close link between outside options and risk attitude: when a decision-maker gains access to an outside option, her behaviour becomes less risk-averse, and conversely, any observed decrease of risk-aversion can be explained by an outside option having been made available. We characterise the comparative statics of risk-aversion, delineating how effective risk attitude (i.e. actual choice among risky prospects) varies with the outside option and with the decision-maker's 'true' risk attitude. We prove that outside options are special: among transformations of a decision problem, those that amount to adding an outside option are the only ones that always reduce risk-aversion. |
| title | Outside options and risk attitude |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2509.14732 |