Recent experimental studies have focused on fitting parameterized functional forms to cumulative prospect theory's weighting function. This paper examines the behavioral implications of the functional forms and the estimated parameters. We find that none of the parameterizations can...

Group decision making is commonly used in juries, businesses, and in politics to increase the informational basis for a decision and to improve judgment accuracy. Recent work on generalizing Condercet's (1976) jury theorem provides a compelling justification for using groups in this manner. But...

Information ambiguity is prevalent in organizations and likely influences management decisions. This study examines, given imprecise probabilities and outcomes, how managers make choices when they are provided with single-figure benchmarks. Seventy-nine MBA students completed two experiments. We...

Swedish cross-sectional survey data on young individuals was used to analyse the determinants of perceived risks of alcohol use and how these perceptions relate to drinking behaviour. Three major conclusions were drawn: (1) that people overestimate the risks of alcoholism, (2) that these risk...

By supplementing income explicitly through payments or implicitly through taxes collected, income-based taxes and transfers make disposable income less variable. Because disposable income determines consumption, policies that smooth disposable income also create welfare improving consumption...

This paper analyzes two issues: (a) the effect of decision-weights on risk premium, and (b) whether risk-aversion characterizes most investors. We theoretically show that cumulative prospect theory decision-weights systematically increase Arrow's (1965) risk premium, and may induce a positive...

Experimental auctions were used to examine the effects of alternative descriptions of food irradiation on willingness-to-pay for a pork sandwich irradiated to control Trichinella. As expected, a favorable description of irradiation increased willingness-to-pay, and an unfavorable description...

Traditional insurance contracts do not offer protection against the replacement value of a vehicle. A replacement cost endorsement gives the opportunity to get a new vehicle in the case of a total theft or in the case of total destruction of the car in a road accident. This type of protection...

The endowment effect, status quo bias, and loss aversion are robust and well documented results from experimental psychology. They introduce a wedge between the prices at which one is willing to sell or buy a good. The objective of this paper is to address this wedge. We show that the presence...