Download This PaperA Theory of the Gambling Effect
Journal of Risk and Uncertainty (2004) 29, 241-259
CentER Working Paper No. 75
32 Pages Posted: 31 Dec 2000
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.
Keywords: gambling, non expected utility theory, risk aversion
JEL Classification: C60, D81
Suggested Citation: Suggested Citation
Diecidue, Enrico and Schmidt, Ulrich and Wakker, Peter P., A Theory of the Gambling Effect. Journal of Risk and Uncertainty (2004) 29, 241-259, CentER Working Paper No. 75, Available at SSRN: https://ssrn.com/abstract=244664 or http://dx.doi.org/10.2139/ssrn.244664
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