Subjects who overestimate their performance in experimental tasks unrelated to travel are less willing to insure against failing in the task and also less inclined to buy travel insurance. This suggests intrinsic optimism influences insurance demand and diminishes adverse selection.

This note introduces a scoring rule for ordinal likelihood judgments based on the linear scoring rule. If the ordinal judgments are strict, the scoring rule is incentive compatible for expected utility maximizers as long utility is increasing in wealth. When allowing for non-strict judgments,...

When risk averse forecasters are presented with risk neutral proper scoring rules, they report probabilities whose ratios are shaded towards 1. If elicited probabilities are used as inputs to decision-making, naive elicitors may violate first-order stochastic dominance.

We observe that identification of the discount rate from experimental data requires an assumption about the consumption period, the length of time over which a payment will be turned into utility-providing consumption. We show that the optimal consumption period is substantially longer than...

Entry decisions in market entry games usually depend on the belief about how many others are entering the market, the belief about the own rank in a real effort task, and subjects’ risk preferences. In this paper I am able to replicate these basic results and examine two further dimensions:...

This paper analyzes gender differences in the disposition effect in an experiment based on Weber and Camerer (1998). The results emphasize that female investors realize less capital losses, have significantly higher disposition effects and are more loss averse than men.

The results of a new experiment show that the Allais paradox (or, more generally, the common consequence effect) gets reversed, i.e. fanning-in choice patterns significantly outnumber fanning-out choice patterns. Revealed indifference curves fan in along the horizontal axis and hypotenuse of the...

In three binary choice problems, people reveal a choice pattern which falsifies expected utility theory and many generalized non-expected utility theories. This new paradox challenges popular non-expected utility models analogously to how the Allais paradox challenged neoclassical expected...

We describe an ambiguity hedging problem in Ellsberg experiments, where combinations of individually ambiguous bets eliminate aggregate ambiguity, and which may yield incorrect classifications of ambiguity averse subjects. We propose a new classification consistent with this hedging possibility.

We report an experiment in which subjects are not indifferent between real-money lotteries implemented with randomization devices that are equivalent under the Reduction Axiom. Instead, choice behavior is consistent with subjective distortion of conditional probability, and this persists in...