The purpose in this letter is to demonstrate, employing two parametric forms of the Markowitz model of utility, that heterogeneity of preferences of Markowitz agents can contribute towards an explanation of why lotteries typically have multiple rather than single prizes.

We demonstrate theoretically and illustrate the implications of assuming power utility when the true function is of the expo-power form. Empirical results can appear to be consistent with cumulative prospect theory when they are in fact generated from a Markowitz model.

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.

We elicit human conditional punishment types by conducting experiments. We find that their punishment decisions to an individual are on average significantly positively proportional to other members’ punishment decisions to that individual.

In an experiment, we study risk-taking of cohabitating student couples, finding that couples’ decisions are closer to risk-neutrality than single partners’ decisions. This finding is similar to earlier experiments with randomly assigned groups, corroborating external validity of earlier results.

We study behavior in the race game with the aim of assessing whether teams can create synergies. The race game has the advantage that the optimal strategy depends neither on beliefs about other players nor on distributional or efficiency concerns. Our results reveal that teams not only...

We apply the die rolling experiment of Fischbacher and Föllmi-Heusi (2013) to a two-player tournament incentive scheme. Our treatments vary the prize spread. The data highlights that honesty is more pronounced when the prize spread is small.

We study dictator allocations using a 2×2 experimental design that varies the level of anonymity and the choice set, allowing observation of audience effects in both give and take frames. Changes in the distribution of responses across treatment cells allow us to distinguish among alternative...

Extending the die rolling experiment of Fischbacher and Föllmi-Heusi (2013), we compare gender effects with respect to unethical behavior by individuals and by two-person groups. In contrast to individual decisions, gender matters strongly under group decisions. We find more lying in male...

In this paper, we consider the optimal selling strategy for an asset securitization originator (the issuer) when the potential buyers hold diverse beliefs. We find that the tranching process is beneficial to the issuer because it increases the total sale price. We also consider the optimal...