This experimental study investigates the interaction of two influential factors of biased probability judgments. Results provide new insights on the preconditions for an application of either the gambler’s fallacy or its exact opponent, the hot hand fallacy. The first factor is cognitive...

This article examines the effects on outcome-expectancies of precise versus vague information across two contexts: prior to an action taken by the consumer (pre-action) and after the action is taken (post-action). Across three experiments, we show that with vague information individuals are more...

Despite the great deal of research on dynamic inconsistency in time preferences, few studies have ventured into investigating the question in a natural context. To address this gap, we conduct a natural field experiment with over 200 customers at a grocery store to investigate dynamic...

A prominent finding in the literature on gender competition is that women are less inclined to compete in comparison to men. In this paper, we conduct a laboratory experiment to examine the relevance of beliefs about the sex of potential competitors on men’s and women’s decision to enter...

Considerable research demonstrates a “compromise effect” showing preference for “middle” options. Yet, in the context of bundles, the “middle” option in a choice set can be composed in multiple ways. First, a bundle may include only purely moderate options (e.g., individual stocks...

We analyze data from experimental auctions of orange maize in rural Zambia using the Becker-deGroot-Marschak (BDM) mechanism to estimate the willingness-to-pay (WTP) for the maize. Further, BDM data is combined with first-price auction data to estimate individual risk attitudes. The orange maize...

A fundamental question is how firms adapt to environments that present multiple dimensions. Generally, the number of dimensions may exceed the limits of human attention. Subsequently, as organizations try to adapt to such environments they may be constrained to consider only a few dimensions. In...

This paper experimentally tests the Fox-Tversky (1995) source preference hypothesis as axiomatized in Chew and Sagi (2008) where people may have preference between equally distributed risks depending on the underlying sources of uncertainty. We study two forms of source preference. One is based...

The purpose of this chapter is to discuss how regulatory focus theory, a theory of motivation and self-regulation, can be drawn upon to explain a variety of consumer decision making phenomena. We briefly review the major tenets of the theory, which proposes a fundamental distinction between two...

Do households comprehend the nature of price tail-risks inherent to real-time electricity pricing plans? We develop a randomized and incentivized experiment calibrated to real-world price distributions and find that (a) probabilistic risk disclosure elicits greater demand for real-time pricing...