We study whether probability weighting is observed when individuals are presented with a series of choices between lotteries consisting of real non-monetary adverse outcomes, electric shocks. Our estimation of the parameters of the probability weighting function proposed by Tversky and Kahneman...

This paper tests whether strategic uncertainty employs circuits in the brain that encode risk and utility, or circuits that are involved in Theory of Mind (ToM). We compare participants’ decisions in a stag-hunt game with an equivalent choice between Bernoulli lotteries where the probabilities...

There are two regularities we have learned from experimental studies of choice under risk. The first is that the majority of people weigh objective probabilities non-linearly. The second regularity, although less commonly acknowledged, is that there is a large amount of heterogeneity in how...

There are two regularities we have learned from experimental studies of choice under risk. The first is that the majority of people weigh objective probabilities nonlinearly. The second regularity, although less commonly acknowledged, is that there is a large amount of heterogeneity in how...

The existence of multiple equilibria is one explanation for why some countries are rich while others are poor. This explanation also allows the possibility that changes in political and economic institutions might help poor countries "jump" from a bad economic equilibrium into a better one,...

Intertemporal choices are decisions with consequences that play out over time. These choices range from the prosaic–-how much food to eat at a meal– to life--changing decisions about education, marriage, fertility, health behaviors and savings. Intertemporal preferences also affect...