Psychological expected utility theory and anticipatory feelings

Andrew Caplin, John Leahy

    Research output: Contribution to journalArticle

    Abstract

    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.

    Original languageEnglish (US)
    Pages (from-to)55-79
    Number of pages25
    JournalQuarterly Journal of Economics
    Volume116
    Issue number1
    DOIs
    StatePublished - Feb 2001

    ASJC Scopus subject areas

    • Economics and Econometrics

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