School of Technology and Computer Science
Tata Institute of Fundamental Research
Homi Bhabha Road, Navy Nagar
The first part of the talk will be an introduction to Kahneman and Tversky's seminal Prospect Theory, which is a descriptive theory of how people evaluate risk. We will then see a rich model of casino gambling, which captures some features of actual gambling behavior (Barberis 2012). We will analyze, in particular, time inconsistencies that are observed in casinos : a player might enter the casino with an exit strategy in mind; but once he starts playing, he wants to switch to a different strategy.