This paper focuses on decisions under ambiguity. Participants in a laboratory experiment made decisions in three different settings: (a) individually, (b) individually after discussing the decisions with others, and (c) in groups of three. We show that groups are more likely to make...

We model a dynamic purchase context in which a consumer is uncertain about the product's valuation. The consumer has two purchase opportunities for the product: forward purchase in period 1 or spot purchase in period 2. Two forms of regret are considered: buyer's regret over the money paid in...

The most commonly employed decision making paradigms are expected utility, prospect theory and regret theory. We examine the simple heuristic of maximizing the probability of being ahead, which in some natural economic situations may be in contradiction to all three of the above fundamental...

This paper describes an experiment designed to study the effect of aspiration levels on individual choices under risk.We observe preferences for prospects that offer various probabilities of achieving aspiration levels; the resulting choice patterns characterize a heuristic for reducing the...

We present a new behavioral foundation for regret theory. The central axiom of this foundation — trade-off consistency — renders regret theory observable at the individual level and makes our foundation consistent with the existing measurement method. For the first time, our behavioral...

Despite the intuition that risk preferences affect intertemporal choice because the future is uncertain, time discounting is commonly regarded as a reflection of impatience. This interpretation of time discounting rests on the assumption that risk preferences are fully controlled for in the...

We present new evidence from the lab on the outcomes resulting from collective and individual decisions over time. We combined static and longitudinal methods to test four conditions on individual and collective time preferences: impatience, stationarity, age independence, and dynamic...

We examine risk attitudes under regret theory and derive analytical expressions for two components - the resolution and regret premiums - of the risk premium under regret theory. We posit that regret-averse decision makers are risk seeking (resp., risk averse) for low (resp., high) probabilities...