Showing 1 - 10 of 3,308
We propose and axiomatize a new model of incomplete preferences under uncertainty, which we call hope-and-prepare preferences. An act is considered more desirable than another when, and only when, both an optimistic evaluation, computed as the welfare level attained in a best-case scenario, and...
Persistent link: https://www.econbiz.de/10015325432
We measure individual-level loss aversion using three incentivized, representative surveys of the U.S. population (combined N = 3,000). We find that around 50% of the U.S. population is loss tolerant, with many participants accepting negative-expected-value gambles. This is counter to earlier...
Persistent link: https://www.econbiz.de/10013353432
We collect 1,021 estimates from 92 studies that use the consumption Euler equation to measure relative risk aversion and that disentangle it from intertemporal substitution. We show that calibrations of risk aversion are typically larger than estimates thereof. Moreover, reported estimates are...
Persistent link: https://www.econbiz.de/10013394385
This paper empirically examines the behavioral precautionary saving hypothesis that uncertainty about future income triggers an increase in saving because of loss aversion. Guided by the theoretical model of Koszegi and Rabin (2009), we first extend their theoretical analysis to also consider...
Persistent link: https://www.econbiz.de/10014327031
Preferences are key for shaping decision-making, yet it remains an open question where preferences originate from. We investigate the causal effect of the childhood social environment on adults' preferences. We utilize a natural experiment in Denmark, which randomized refugees to different...
Persistent link: https://www.econbiz.de/10014377629
We design and implement the first real-effort experiment that can jointly estimate present bias (Ø) and sophistication (bØ), with separate preference parameters for money (Øm, bØm) and effort (Øe, bØe). In our study, participants chose to (and predicted to) complete 14% (and 10%) fewer...
Persistent link: https://www.econbiz.de/10014474499
We study the value of and the demand for instrumentally-valuable information in a simple decision environment where signals are transparently polarized. We find that in both information aggregation and acquisition, subjects use sophisticated heuristics to counter the polarization in signals....
Persistent link: https://www.econbiz.de/10014474501
In a novel experimental design, we study how social immobility affects the choice among distributional schemes in an experimental democracy. We design a two-period experiment in which subjects first choose a distributional scheme by majority voting (“social contract”). Then subjects engage...
Persistent link: https://www.econbiz.de/10014504499
We propose a class of dynamic models that capture subjective (and hence unobservable) constraints on the amount of information a decision maker can acquire, pay attention to, or absorb, via an Information Choice Process (ICP). An ICP specifies the information that can be acquired about the...
Persistent link: https://www.econbiz.de/10014536900
We propose a novel way of measuring trust in institutions, which draws on the experimental method used to elicit time preferences. Our measure is provided in the meaningful metric of the subjective probability of trustworthiness of the trustee. In a lab-in-the-field setting in the Philippines,...
Persistent link: https://www.econbiz.de/10014536943