This seems to make an unwarranted assumption about exactly how the marginal utility diminishes.
The paper, or my comment? I interpreted the paper as an attack on (explanatory) models of risk aversion that are based on this (quite general) type of utility curve, with the conclusion that observed behavior can’t be motivated by such a curve.
This is a great example of If It’s Worth Doing, It’s Worth Doing With Made-Up Statistics. If the assumption is your True Rejection, it’s worth playing around with alternate models to see if you can get a different answer. The simple truth is that humans are dynamically inconsistent.
This seems to make an unwarranted assumption about exactly how the marginal utility diminishes.
The paper, or my comment? I interpreted the paper as an attack on (explanatory) models of risk aversion that are based on this (quite general) type of utility curve, with the conclusion that observed behavior can’t be motivated by such a curve.
This is a great example of If It’s Worth Doing, It’s Worth Doing With Made-Up Statistics. If the assumption is your True Rejection, it’s worth playing around with alternate models to see if you can get a different answer. The simple truth is that humans are dynamically inconsistent.