Similar Search Results

Choi, Syngjoo; Kariv, Shachar; Wieland M?ller; … - In: American Economic Review 104 (2014) 6, pp. 1518-50

Revealed preference theory offers a criterion for decision-making quality: if decisions are high quality then there exists a utility function the choices maximize. We conduct a large-scale experiment to test for consistency with utility maximization. Consistency scores vary markedly within and...

Persistent link: https://www.econbiz.de/10010777186

Reference-Dependent Consumption Plans

Koszegi, Botond; Rabin, Matthew - In: American Economic Review 99 (2009) 3, pp. 909-36

We develop a rational dynamic model in which people are loss averse over changes in beliefs about present and future consumption. Because changes in wealth are news about future consumption, preferences over money are reference-dependent. If news resonates more when about imminent consumption...

Persistent link: https://www.econbiz.de/10005014649

Risk Preferences Are Not Time Preferences

Andreoni, James; Sprenger, Charles - In: American Economic Review 102 (2012) 7, pp. 3357-76

Risk and time are intertwined. The present is known while the future is inherently risky. This is problematic when studying time preferences since uncontrolled risk can generate apparently present-biased behavior. We systematically manipulate risk in an intertemporal choice experiment....

Persistent link: https://www.econbiz.de/10010815566

The Evolution of Time Preference with Aggregate Uncertainty

Robson, Arthur J.; Samuelson, Larry - In: American Economic Review 99 (2009) 5, pp. 1925-53

We examine the evolutionary foundations of intertemporal preferences. When all the risk affecting survival and reproduction is idiosyncratic, evolution selects for agents who maximize the discounted sum of expected utility, discounting at the sum of the population growth rate and the mortality...

Persistent link: https://www.econbiz.de/10008596307

Behavioral Biases and Firm Behavior: Evidence from Kenyan Retail Shops

Kremer, Michael; Lee, Jean; Robinson, Jonathan; … - In: American Economic Review 103 (2013) 3, pp. 362-68

Many subjects in lab experiments exhibit small-stakes risk aversion, consistent with loss aversion. Those with greater math skills are less likely to show small-stakes risk aversion. We argue that departures from expected utility maximization may help explain why many firms in developing...

Persistent link: https://www.econbiz.de/10010659325

Who Matters in Coordination Problems?

Sákovics, József; Steiner, Jakub - In: American Economic Review 102 (2012) 7, pp. 3439-61

Agents face a coordination problem akin to the adoption of a network technology. A principal announces investment subsidies that, at minimal cost, attain a given likelihood of successful coordination. Optimal subsidies target agents who impose high externalities on others and on whom others...

Persistent link: https://www.econbiz.de/10011129966

Rational Inattention to Discrete Choices: A New Foundation for the Multinomial Logit Model

Matêjka, Filip; McKay, Alisdair - In: American Economic Review 105 (2015) 1, pp. 272-98

Individuals must often choose among discrete actions with imperfect information about their payoffs. Before choosing, they have an opportunity to study the payoffs, but doing so is costly. This creates new choices such as the number of and types of questions to ask. We model these situations...

Persistent link: https://www.econbiz.de/10011107213

Self-Confirming Equilibrium and Model Uncertainty

Battigalli, Pierpaolo; Cerreia-Vioglio, Simone; … - In: American Economic Review 105 (2015) 2, pp. 646-77

We analyze a notion of self-confirming equilibrium with non-neutral ambiguity attitudes that generalizes the … traditional concept. We show that the set of equilibria expands as ambiguity aversion increases. The intuition is quite simple: by … strategies yield payoffs with unknown distributions; increased aversion to ambiguity makes such strategies less appealing. In sum …

Persistent link: https://www.econbiz.de/10011156810

Polarization and Ambiguity

Baliga, Sandeep; Hanany, Eran; Klibanoff, Peter - In: American Economic Review 103 (2013) 7, pp. 3071-83

impossible under Bayesian updating or after observing extreme signals. However, we also show that polarization can arise after …We offer a theory of polarization as an optimal response to ambiguity. Suppose individual A's beliefs first … intermediate signals as ambiguity averse individuals implement their optimal prediction strategies. We explore when this …

Persistent link: https://www.econbiz.de/10010815522

Entropy and the Value of Information for Investors

Cabrales, Antonio; Gossner, Olivier; Serrano, Roberto - In: American Economic Review 103 (2013) 1, pp. 360-77

Consider an investor who fears ruin when facing investments that satisfy no-arbitrage. Before investing he can purchase information about the state of nature as an information structure. Given his prior, information structure Î± investment dominates information structure Î² if, whenever he...

Persistent link: https://www.econbiz.de/10010815577