We investigate whether violations of canonical axioms of choice under risk are mistakes or a manifestation of true preferences. First, we elicit axiom and gamble preferences and then allow subjects to revise their potentially conflicting preferences. Among the behavioral patterns that allow for...

The random incentive system (RIS) is a standard incentive scheme used to elicit preferences in economic experiments. However, it has been speculated that RIS may not be incentive compatible when participants are concerned about ambiguity, i.e., that the choices observed under RIS do not reflect...

This paper demonstrates that well-established biases in decision making under uncertainty can generate poverty traps. A theoretical framework is developed to demonstrate that: i) probability weighting and ambiguity attitude can lead individuals to erroneously undervalue profitable investments,...