http://andrewgelman.com/2005/04/19/loss_aversion_e/
http://www.econjobrumors.com/topic/risk-aversion-concave-utility-andrew-gelman/page/2
Wow, the Rabin CARA troll is noted megaposter Deb Frisch
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She provides arguments showing Rabin's theorem is bunk. How does that make her a troll?
Read the thread below. She is a2e4. No, her points are not valid.
http://www.econjobrumors.com/topic/is-behavioral-economics-doomed
The combination of lack of reasoning and grandiose belief in having disproven a major result reminds very much of the OP in this thread, though it's just a hunch:
http://www.econjobrumors.com/topic/whats-the-deal-with-arrows-impossibility-theorem
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The fact that you don't try to refute her simple paragraph of algebra disproving Rabin's theorem suggests that you can't. All you can do is chant your mantra "trolltrolltroll."
Gelman proved Rabin's theorem in a much more simple and elegant way two years before Rabin. He did not think it was a big deal and it was published in a paper on classroom demonstrations. As Gelman's prove illustrates, the phenomenon applies to pure gains, not just mixed gambles like Rabin assumes. Rabin and Thaler give 11 examples - all involve mixed gambles (50-50 win 11/lose 10) even though a DM who always rejects a 50-50 win 11/lose 10 gamble will always prefer 10 to a 50-50 chance of winning 21.
The fact that the Gelman/Rabin theorem applies to gains as well as losses means that the theorem doesn't provide evidence for loss aversion. While Gelman's theorem is general, Rabin and Thaler are very specific - a DM who ALwAYS rejects a 50-50 win 11/lose 10 gamble will always reject a 50-50 win infinity/lose 100 example. It turns out that the formula implicitly used by Rabin and Thaler (A DM who always rejects a 50-50 win G/lose L gamble will always reject a 50-50 win infinity/lose L-prime gamble, where L-prime =(L^2)/(W-L) is false.
For more, google "Rabin and Thaler 2001" -
You are not an economist. It is explained clearly in the other thread that your arguments are based on misunderstandings of the structure of Rabin's claims, yet you still insist that you are right. You mistakenly misinterpret your failure to understand why you are wrong as evidence that you have not been shown to be wrong.
Please stop posting on this board. You have no relation to the economics job market and you are not contributing to the discussion of economics research.
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I disagree about who is confused about Rabin's Calibration Theorem. But I agree that the theorem has been debated enough on this site.
FYI: On the wikipedia risk aversion page, it says "It is noteworthy that Rabin's article went on to criticize the whole field of expected utility and not just constant relative risk aversion. This has led to some confusion in the field."
http://en.wikipedia.org/wiki/Risk_aversion
Rabin's theorem has to do with constant absolute risk aversion, not constant relative risk aversion. The person who wrote the sentences above proved his own point - the theorem has definitely led to confusion in the field.
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