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Disentangling Exploration from Exploitation

Lizzeri, Alessandro; Shmaya, Eran; Yariv, Leeat - National Bureau of Economic Research - 2024

Starting from Robbins (1952), the literature on experimentation via multi-armed bandits has wed exploration and exploitation. Nonetheless, in many applications, agents' exploration and exploitation need not be intertwined: a policymaker may assess new policies different than the status quo; an...

Persistent link: https://www.econbiz.de/10014544703

Dynamic Inconsistency in Risky Choice : Evidence from the Lab and Field

Heimer, Rawley; Iliewa, Zwetelina; Imax, Alex; Weber, Martin - National Bureau of Economic Research - 2023

We document a robust dynamic inconsistency in risky choice. Using a unique brokerage dataset and a series of experiments, we compare people's initial risk-taking plans to their subsequent decisions. Across settings, people accept risk as part of a "loss-exit" strategy--planning to continue...

Persistent link: https://www.econbiz.de/10014226107

Sorting under Risk Sharing and Complementarities

Chade, Hector; Lindenlaub, Ilse - National Bureau of Economic Research - 2024

How does the presence of risk sharing affect sorting patterns on productive attributes when there are complementarities among partners' skills in match output? We develop a matching model in which risk-averse agents, who differ in skills, match pairwise for productive purposes. Match output has...

Persistent link: https://www.econbiz.de/10014468251

Corporate Valuation : An Empirical Comparison of Discounting Methods

Hommel, Nicolas; Landier, Augustin; Thesmar, David - National Bureau of Economic Research - 2023

The key purpose of corporate finance is to provide methods to compute the value of projects. The baseline textbook recommendation is to use the Present Value (PV) formula of expected cash flows, with a discount rate based on the CAPM. In this paper, we ask what is, empirically, the best...

Persistent link: https://www.econbiz.de/10013537790

Global Natural Rates in the Long Run : Postwar Macro Trends and the Market-Implied r* in 10 Advanced Economies

Davis, Joshua M.; Fuenzalida, Cristian; Huetsch, Leon; … - National Bureau of Economic Research - 2023

Benchmark finance and macroeconomic models appear to deliver conflicting estimates of the natural rate and bond risk premia. This natural rate puzzle applies not only in the U.S. but across many advanced economies. We use a unified no-arbitrage macro- finance model with two trend factors to...

Persistent link: https://www.econbiz.de/10014421212

Understanding Expert Choices Using Decision Time

Card, David E.; Della Vigna, Stefano; Jiang, Chenxi; … - National Bureau of Economic Research - 2024

Laboratory experiments find a robust relationship between decision times and perceived values of alternatives. This … paper investigates how these findings translate to experts' decision making and information acquisition in the field. In a … be chosen later than earlier; (ii) decision time is higher when the likelihood of choosing each alternative is closer to …

Persistent link: https://www.econbiz.de/10014544793

Quantifying Lottery Choice Complexity

Enke, Benjamin; Shubatt, Cassidy - National Bureau of Economic Research - 2023

We develop interpretable, quantitative indices of the objective and subjective complexity of lottery choice problems that can be computed for any standard dataset. These indices capture the predicted error rate in identifying the lottery with the highest expected value, where the predictions are...

Persistent link: https://www.econbiz.de/10014372434