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Cognitive Ability and Paternalism
Saint-Paul, Gilles - 2002
This paper analyses the welfare effects of price restrictions on private contracting in a world where agents have a limited cognitive ability. People compute the costs and benefits of entering a transaction with an error. The government knows the distribution of true costs and benefits as well...
Persistent link: https://www.econbiz.de/10010262616
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Intended College Attendance: Evidence from an Experiment on College Returns and Cost
Bleemer, Zachary; Zafar, Basit - 2015
Despite a robust college premium, college attendance rates in the US have remained stagnant and exhibit a substantial socioeconomic gradient. We focus on information gaps – specifically, incomplete information about college benefits and costs – as a potential explanation for these patterns....
Persistent link: https://www.econbiz.de/10011401724
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Anchoring in Financial Decision-Making: Evidence from the Field
Jetter, Michael; Walker, Jay K. - 2016
anchoring phenomenon in financial decision-making. We find that contestants anchor heavily on the initial dollar value of a clue … in their wagering decision, even though there exists no rational reason to do so. More than half of all wagers occur … manifests itself among college students. Overall, our findings suggest anchoring plays a substantial role in financial decision …
Persistent link: https://www.econbiz.de/10011559579
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True Overconfidence, Revealed through Actions: An Experiment
Cheung, Stephen L.; Johnstone, Lachlan - 2017
We report an experiment that infers true overconfidence in relative ability through actions, as opposed to reported beliefs. Subjects choose how to invest earnings from a skill task when the returns depend solely upon risk, or both risk and relative placement, enabling joint estimation of...
Persistent link: https://www.econbiz.de/10011653273
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Time Will Tell: Recovering Preferences When Choices Are Noisy
Alós-Ferrer, Carlos; Fehr, Ernst; Netzer, Nick - 2018
The ability to uncover preferences from choices is fundamental for both positive economics and welfare analysis. Overwhelming evidence shows that choice is stochastic, which has given rise to random utility models as the dominant paradigm in applied microeconomics. However, as is well known, it...
Persistent link: https://www.econbiz.de/10011984478
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Testing the Reference-Dependent Model: A Laboratory Search Experiment
Miura, Takahiro; Inukai, Keigo; Sasaki, Masaru - 2019
Our paper conducts laboratory experiments with the sequential search model to test whether participants engage in search activities in line with theoretical predictions derived from the expected utility model or the reference-dependent model, without assuming any specific formulation rule for a...
Persistent link: https://www.econbiz.de/10012059108
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Rational Inattention and Migration Decisions
Bertoli, Simone; Fernández-Huertas Moraga, Jesús; … - 2020
Acquiring information about destinations can be costly for migrants. We model information frictions in the rational inattention framework and obtain a closed-form expression for a migration gravity equation that we bring to the data. The model predicts that ows from countries with a higher cost...
Persistent link: https://www.econbiz.de/10012207764
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Navigating Ambiguity: Imprecise Probabilities and the Updating of Disease Risk Beliefs
Kerwin, Jason; Pandey, Divya - 2023
Probabilistic risk beliefs are key drivers of economic and health decisions, but people are not always certain about their beliefs. We study these "imprecise probabilities", also known as ambiguous beliefs. We show that imprecision is measurable separately from the levels of risk beliefs. People...
Persistent link: https://www.econbiz.de/10014469382
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Consumer Search Costs and Preferences on the Internet
Jolivet, Grégory; Turon, Hélène - 2014
We analyse consumers' search and purchase decisions on an Internet platform. Using a rich dataset on all adverts posted and transactions made on a major French Internet platform (PriceMinister), we show evidence of substantial price dispersion among adverts for the same product. We also show...
Persistent link: https://www.econbiz.de/10010468167
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Media and Occupational Choice
Konon, Alexander; Kritikos, Alexander S. - 2017
We address the question of whether media influences occupational choices. To theoretically examine media effects, we construct a dynamic Bayesian occupational choice model with sequential decisions under ambiguity due to imperfect information. We show that sufficiently intensive positive media...
Persistent link: https://www.econbiz.de/10011744727