We provide an evolutionary foundation to evidence that in some situations humans maintain optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents' actions and maximize...

We provide an evolutionary foundation to evidence that in some situations humans maintain either optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents' actions and...

Social lotteries are lotteries that are played along with someone else. The experimental literature indicates that risk attitudes depend on how one’s situation in the safe alternative compares to that of a peer. Evaluation of the risky alternative also depends on whether the lottery gives...

The preference reversal phenomenon is one of the most important, long-standing, and widespread anomalies contradicting economic models of decisions under risk. It describes the robust observation of frequent "standard reversals" where long-shot gambles are valued above moderate ones but then the...

Preferences over risky alternatives can be elicited by different methods, including direct pairwise choices and willingness-to-accept valuations. The results are frequently at odds, casting doubts on the foundations of economics. We develop a stochastic choice model predicting when...

Product lotteries are a sales strategy where companies hide features of differentiated products from consumers until the purchase is complete. I identify loss aversion as an important factor explaining the existence of vertical product lotteries. I consider a profit-maximizing monopolist serving...

Are individuals always better off when their preferences can be represented by expected utility?I study this question in a bargaining game where individuals bargain over a pie of fixed size, and I contrast the share received in the long-run by expected utility maximisers with the share they...

Purpose In this paper, the authors study the effect of consumers' fairness preferences on dynamic pricing strategies adopted by platforms in a non-cooperative game. Design/methodology/approach This study applies fair game and repeated game theory. Findings This study reveals that, in a one-shot...