Monetary Services Aggregation Under Uncertainty: A Behavioral Economics Extension Using Choquet Expectation

William Barnett, Qing Han and Jianbo Zhang
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Qing Han: The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise
Jianbo Zhang: The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise

No 117, Studies in Applied Economics from The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise

Abstract: A central tenet of behavioral economics is that the axioms producing expected utility maximization by consumers are too strong to be descriptive of rational behavior. The existing theory of monetary services aggregation under risk assume expected utility maximization. We extend those results to uncertainty under weaker axiomatic assumptions by using Choquet expectations. Choquet integration reduces to Riemann integration as a special case under the stronger assumption of additive probability measure, not accepted in the literature on behavioral economics. Our theoretical results on monetary services aggregation are generalizations of prior results, nested as special cases of our results under stronger behavioral assumptions.

Keywords: Uncertainty Aversion; User Cost; Choquet Expectation; Monetary Aggregation (search for similar items in EconPapers)
JEL-codes: C43 E41 G12 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2018-09
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Related works:
Journal Article: Monetary services aggregation under uncertainty: A behavioral economics extension using Choquet expectation (2021)
Working Paper: Monetary Services Aggregation under Uncertainty: A Behavioral Economics Extension Using Choquet Expectation (2018)
Working Paper: Monetary Services Aggregation under Uncertainty: A Behavioral Economics Extension Using Choquet Expectation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jhisae:0117

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