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Expectations-Based Loss Aversion May Help Explain Seemingly Dominated Choices in Strategy-Proof Mechanisms

Dreyfuss, Bnaya - 2019

Deferred Acceptance (DA), a widely implemented algorithm, is meant to improve allocations: under classical preferences, it induces preference-concordant rankings. However, recent evidence shows that—in both real, large-stakes applications and experiments—participants frequently play...

Persistent link: https://www.econbiz.de/10012860839

Estimating Individual Ambiguity Aversion : A Simple Approach

Gneezy, Uri - 2015

We introduce a simple, easy to implement instrument for jointly eliciting risk and ambiguity attitudes. Using this … instrument, we structurally estimate a two-parameter model of preferences. Our findings indicate that ambiguity aversion is … significantly overstated when risk neutrality is assumed. This highlights the interplay between risk and ambiguity attitudes as well …

Persistent link: https://www.econbiz.de/10013027263

A New Method of Estimating Risk Aversion

Chetty, Raj - 2003

This paper develops a method of estimating the coefficient of relative risk aversion (g) from data on labor supply. The main result is that existing estimates of labor supply elasticities place a tight bound on g, without any assumptions beyond those of expected utility theory. It is shown that...

Persistent link: https://www.econbiz.de/10012786381

Consumption : Beyond Certainty Equivalence

Blanchard, Olivier J.; Mankiw, N. Gregory - 2021

This paper discusses the recent research on the consumption function that has attempted to relax the assumption of certainty equivalence. While there remain many open questions, both theoretical and empirical, it is clear that the assumption of certainty equivalence can be misleading. Under more...

Persistent link: https://www.econbiz.de/10013230992

Survival Ambiguity and Welfare

Caliendo, Frank - 2017

this assumption. If there is no annuity market, then the welfare cost of survival ambiguity is large and regressive …. Individuals would pay as much as 1% of total lifetime consumption for immediate resolution of ambiguity and the bottom income …, survival ambiguity is welfare improving because it allows competitive insurance companies to pool risk across survival types …

Persistent link: https://www.econbiz.de/10012950059

Computing DSGE Models with Recursive Preferences

Caldara, Dario - 2010

This paper compares different solution methods for computing the equilibrium of dynamic stochastic general equilibrium (DSGE) models with recursive preferences such as those in Epstein and Zin (1989 and 1991). Models with these preferences have recently become popular, but we know little about...

Persistent link: https://www.econbiz.de/10013152598

Parenting with Style : Altruism and Paternalism in Intergenerational Preference Transmission

Doepke, Matthias - 2014

We develop a theory of parent-child relations that rationalizes the choice between alternative parenting styles (as set out in Baumrind 1967). Parents maximize an objective function that combines Beckerian altruism and paternalism towards children. They can affect their children's choices via...

Persistent link: https://www.econbiz.de/10013052504

Risk Preferences are Not Time Preferences : Discounted Expected Utility with a Disproportionate Preference for Certainty

Andreoni, James - 2010

Risk and time are intertwined. The present is known while the future is inherently risky. Discounted expected utility provides a simple, coherent structure for analyzing decisions in intertemporal, uncertain environments. However, we document robust violations of discounted expected utility,...

Persistent link: https://www.econbiz.de/10013138320

Using Elicited Choice Probabilities to Estimate Random Utility Models : Preferences for Electricity Reliability

Blass, Asher - 2010

When data on actual choices are not available, researchers studying preferences sometimes pose choice scenarios and ask respondents to state the actions they would choose if they were to face these scenarios. The data on stated choices are then used to estimate random utility models, as if they...

Persistent link: https://www.econbiz.de/10012758244

Ambiguity Aversion and Household Portfolio Choice : Empirical Evidence

Dimmock, Stephen G. - 2013

We test the relation between ambiguity aversion and five household portfolio choice puzzles: non- participation, low ….S. household survey, we measure ambiguity aversion using custom- designed questions based on Ellsberg urns. As theory predicts …, ambiguity aversion is negatively associated with stock market participation, the fraction of financial assets in stocks, and …

Persistent link: https://www.econbiz.de/10013087877

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