Policy analyses frequently clash. Their disagreements stem from many sources, including models, empirical estimates, and values such as who should have standing and how different criteria should be weighted. We provide a simple taxonomy of disagreement, identifying distinct categories within...

A principal provides budgets to agents (e.g., divisions of a firm or the principal's children) whose expenditures provide her benefits, either materially or because of altruism. Only agents know their potential to generate benefits. We prove that if the more "productive" agents are also more...

We study the predictive power of approximately 2.5 million stock picks submitted by individual users to the “CAPS†website run by the Motley Fool company (www.caps.fool.com). These picks prove to be surprisingly informative about future stock prices. Indeed, a strategy of shorting...

This study assesses the factors influencing the movement of people across health plans. We distinguish three types of cost-related transitions: adverse selection, the movement of the less healthy to more generous plans; adverse retention, the tendency for people to stay where they are when they...

Individuals differ significantly in their willingness to take risks, partly due to genetic differences. We explore how risk taking behavior correlates with different versions of the dopamine receptor D4 gene (DRD4). We focus on risk taking in the card game contract bridge, and economic risk...

Americans purchase health insurance in various ways. Some buy individual policies. For them, medical underwriting is common, and preexisting conditions can preclude, limit, or dramatically increase the cost of coverage. Many buy insurance through small employers, which typically offer little or...

This article addresses the challenge of managing uncertainty when producing estimative intelligence. Much of the theory and practice of estimative intelligence aims to eliminate or reduce uncertainty, but this is often impossible or infeasible. This article instead argues that the goal of...

Financial, managerial, and medical decisions often involve alternatives whose possible outcomes have uncertain probabilities. In contrast to alternatives whose probabilities are known, these uncertain alternatives offer the benefits of learning. In repeat-choice situations, such learning brings...

Movements in asset prices are a major risk confronting individuals. This paper establishes new asset pricing results when agents differ in risk preference, time preference and/or expectations. It shows that risk tolerance is a critical concept driving savings decisions, consumption allocations,...

To trust is to risk. When we lend someone money, we make ourselves vulnerable, hoping or expecting that the borrower will reward our trust and return the money at a later stage, possibly with interest or a reciprocal favor added. This paper examines whether willingness to trust follows the same...