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Best Responding to What? A Behavioral Approach to One Shot Play in 2x2 Games

Gallice, Andrea - Volkswirtschaftliche Fakultät, … - 2007

' beliefs. Various proposals connected with the concept of mixed strategy Nash equilibrium do not match this description. On the … other hand minimax regret obeys all the axioms. Therefore we use minimax regret to approximate players' beliefs and we let … players best respond to these conjectured beliefs. When compared with existing experimental evidences about one shot matching …

Persistent link: https://www.econbiz.de/10005187287

Can intentions spoil the kindness of a gift? - An experimental study

Strassmair, Christina - Volkswirtschaftliche Fakultät, … - 2009

altruism. The question we address in this experimental study is how B reacts to the intentions of A. We vary the probability …

Persistent link: https://www.econbiz.de/10005121215

Foundations and Properties of Time Discount Functions

al-Nowaihi, Ali; Dhami, Sanjit - Department of Economics, Leicester University - 2014

A critical element in all discounted utility models is the specification of a discount function. We introduce three functions: the delay, speedup and generating functions. Each can be uniquely elicited from behaviour. The delay function determines stationary and the common difference effect. The...

Persistent link: https://www.econbiz.de/10010929075

Increasing elasticity of the value function in the Loewenstein-Prelec theory of intertemporal choice

al-Nowaihi, Ali; Dhami, Sanjit - Department of Economics, Leicester University - 2007

In a critique of the Loewenstein and Prelec (1992) theory of intertemporal choice, al-Nowaihi and Dhami (2006) point out to four errors. One of the alleged errors was that the value function in prospect theory is decreasing. But it is in fact increasing. We provide a correction and a formal...

Persistent link: https://www.econbiz.de/10005385014

A value function that explains the magnitude and sign effects

Dhami, Sanjit; al-Nowaihi, Ali - Department of Economics, Leicester University - 2008

Two of the anomalies of the exponentially discounted utility model are the 'magnitude effect' (larger magnitudes are discounted less) and the 'sign effect' (a loss is discounted less than a gain of the same magnitude). The literature has followed Loewenstein and Prelec (1992) in attributing the...

Persistent link: https://www.econbiz.de/10005385056

A general theory of time discounting: The reference-time theory of intertemporal choice

al-Nowaihi, Ali; Dhami, Sanjit - Department of Economics, Leicester University - 2008

We develop a general theory of intertemporal choice: the reference-time theory, RT. RT is a synthesis of ideas from the generalized hyperbolic model (Loewenstein and Prelec 1992), the quasi-hyperbolic model (Phelps and Pollak 1968, Laibson 1997) and subadditivity of time discounting (Roelofsma...

Persistent link: https://www.econbiz.de/10005385062

Revealed preference tests under risk and uncertainty

Polisson, Matthew; Quah, John K.-H. - Department of Economics, Leicester University - 2013

Consider a finite data set where each observation consists of a bundle of contingent consumption chosen from a constraint set of contingent consumption bundles. We develop a general procedure for testing the consistency of such a data set with a broad class of models of choice under risk or...

Persistent link: https://www.econbiz.de/10010721429

Foundations and Properties of Time Discount Functions

al-Nowaihi, Ali; Dhami, Sanjit - Department of Economics, Leicester University - 2013

A critical element in all discounted utility models is the specification of a discount function. We extend the standard model to allow for reference points for both out- comes and time. We consider the axiomatic foundations and properties of two main classes of discount functions. The first, the...

Persistent link: https://www.econbiz.de/10010723273

A Theory of Reference Time

al-Nowaihi, Ali; Dhami, Sanjit - Department of Economics, Leicester University - 2013

We consider a discounted utility model that has two components. (1) The instan- taneous utility is of the prospect theory form, thus, allowing for reference dependent outcomes. (2) The discount function embodies a ‘reference time’ to which all future outcomes are discounted back to, hence,...

Persistent link: https://www.econbiz.de/10010723275

The Behavioral Economics of Insurance

al-Nowaihi, Ali; Dhami, Sanjit - Department of Economics, Leicester University - 2010

underweight high probabilities. (2) Ignore events of extremely low probability and treat extremely high probability events as … certain. (3) Buy inadequate insurance for very low probability events. (4) Keeping the expected loss fixed, there is a … probability below which the take-up of insurance drops dramatically. Expected utility (EU) fails on 1-4. Existing models of rank …

Persistent link: https://www.econbiz.de/10008458599