Journal Article

Psychological Expected Utility Theory and Anticipatory Feelings

Andrew Caplin and John Leahy

in The Quarterly Journal of Economics

Published on behalf of President and Fellows of Harvard University

Volume 116, issue 1, pages 55-79
Published in print February 2001 | ISSN: 0033-5533
Published online February 2001 | e-ISSN: 1531-4650 | DOI: http://dx.doi.org/10.1162/003355301556347
Psychological Expected Utility Theory and Anticipatory Feelings

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We extend expected utility theory to situations in which agents experience feelings of anticipation prior to the resolution of uncertainty. We show how these anticipatory feelings may result in time inconsistency. We provide an example from portfolio theory to illustrate the potential impact of anticipation on asset prices.

Journal Article.  0 words. 

Subjects: Economics

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