Modeling Fear

Jacopo Perego ()
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Jacopo Perego: "Luigi Bocconi" University of Milan

Rivista di Politica Economica, 2011, issue 4, 179-228

Abstract: This paper provides a decision theoretic framework in which agents can possibly experience fearful emotional states. In particular, I axiomatize a lexicographic maxmin framework, throughout called Lexicographic Multiple Priors model, which accounts for different levels of fear, pessimist and conservativeness. Using infinitely less likely events as a motivation for the enlargement of the set of beliefs over the state space, I show how the realization of previously unexpected events can be a condition for fear to arise and to exacerbate.

Keywords: fear; ambiguity; lexicographic multiple priors model; unawareness (search for similar items in EconPapers)
JEL-codes: C44 C72 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:rpo:ripoec:y:2011:i:4:p:179-228

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