{"title":"The Effect of Disappointment Aversion on Risk Prevention","authors":"Yongjin Yin, Shengwang Meng","doi":"10.1002/mde.4423","DOIUrl":null,"url":null,"abstract":"<div>\n \n <p>We adopt three of well-established models of disappointment aversion to study the effect of disappointment aversion on risk prevention which involves self-insurance and self-protection. In self-insurance actions, we show that, in general, the disappointment-averse decision maker will exert more effort than the standard risk-averse decision maker, and the optimal efforts across these disappointment models are not identical. Moreover, under the <i>Gul model</i>, the disappointment-averse decision maker may exert less effort than the standard risk-averse decision maker in multiple loss states. In self-protection actions, we provide a set of sufficient conditions under which the disappointment-averse decision maker will exert more effort or less effort compared with the standard risk-averse decision maker for each of these disappointment aversion models.</p>\n </div>","PeriodicalId":18186,"journal":{"name":"Managerial and Decision Economics","volume":"46 2","pages":"1108-1124"},"PeriodicalIF":2.5000,"publicationDate":"2024-11-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Managerial and Decision Economics","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1002/mde.4423","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
We adopt three of well-established models of disappointment aversion to study the effect of disappointment aversion on risk prevention which involves self-insurance and self-protection. In self-insurance actions, we show that, in general, the disappointment-averse decision maker will exert more effort than the standard risk-averse decision maker, and the optimal efforts across these disappointment models are not identical. Moreover, under the Gul model, the disappointment-averse decision maker may exert less effort than the standard risk-averse decision maker in multiple loss states. In self-protection actions, we provide a set of sufficient conditions under which the disappointment-averse decision maker will exert more effort or less effort compared with the standard risk-averse decision maker for each of these disappointment aversion models.
期刊介绍：
Managerial and Decision Economics will publish articles applying economic reasoning to managerial decision-making and management strategy.Management strategy concerns practical decisions that managers face about how to compete, how to succeed, and how to organize to achieve their goals. Economic thinking and analysis provides a critical foundation for strategic decision-making across a variety of dimensions. For example, economic insights may help in determining which activities to outsource and which to perfom internally. They can help unravel questions regarding what drives performance differences among firms and what allows these differences to persist. They can contribute to an appreciation of how industries, organizations, and capabilities evolve.
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