We design and implement a novel experimental test of subjective expected utility theory and its generalizations. Our … function, but not with subjective utility theory. The theory is tested by gauging how subjects respond to price changes. A … majority of subjects respond to price changes in the direction predicted by the theory, but not to a degree that makes them …

cycles. The decision to buy or rent a durable, financially significant asset is a difficult one for both experts and amateurs … model can encompass all uncertainties revolving around the decision-making. Aiming at offering a practical tool, we propose …

to misspecification, and ultimately leads to post-decision disappointment. Using statistical decision theory, we develop … the model’s implications for optimal decision-making. This practice ignores model ambiguity, exposes the decision problem … a framework to explore, evaluate, and optimize robust decision rules that explicitly account for estimation uncertainty …