We theoretically and experimentally study independent private value auctions in the presence of bidders who are loss averse in the sense of Köszegi and Rabin (2007). In one specification, we consider gains and losses in two dimensions separately, about whether they receive the object or not,...

The paper presents evidence that validate the focusing illusion. Specifically, the forecasted impact of a basketball championship on students’ subjective well-being was exaggerated because of their intense focus on the event. However, the self-reported states of being for life domains not...

We explore the relevancy of subjects' risk preferences recovered using a subjective risk question to those recovered from the incentivized lottery experiments of Holt and Laury (2002), Gneezy and Potters (1997), and Johnson and Webb (2016). While a statistically significant relationship between...

Individual choice exhibits "presentation effects" such as default, ordering and round-number effects. Using existing models, presentation effects bias utility estimates, which suggests instability of preferences and obscures behavioral patterns. This paper derives a generalized model of...

Mullainathan, Schwartzstein, & Shleifer [Quarterly Journal of Economics, May 2008] put forward a model of coarse thinking. The essential idea behind coarse thinking is that agents put situations into categories and then apply the same model of inference to all situations in a given category. We...

This paper reports recent findings on the effects of cheap talk communication on behavior. It exemplifies how different communication channels influence decisions in various games and information environments and addresses possible consequences for the design of real-world economic environments.

The willingness to trust human receivers is compared to the inclination to take lottery risk in six distinct scenarios, controlling the return distributions. Trust shows significantly smaller responsiveness to return expectations compared to parallel pure-risk lottery allocation, and paired...