We test the interest rate sensitivity of subprime credit card borrowers using a unique panel data set from a UK credit card company. We were given details of a randomized interest rate experiment conducted by the lender between October 2006 and January 2007. Access to such information is rare....

A micro decision-making utility model under uncertainty is presented as a complementary foundation for macro coronavirus models. The micro model consists of two functions, a risk averse utility function depending on wellness and a wellness random output which is a function of the input variable...

We use direct evidence on credit constraints to study their importance for household consumption growth and for welfare. We distentangle the direct effect on consumption growth of a currently binding credit constraints from the indirect effect of a potentially binding credit constraint which...

We develop a nonparametric procedure, called the lattice method, for testing the consistency of contingent consumption data with a broad class of models of choice under risk and under uncertainty. Our method allows for risk loving and elation seeking behavior and can be used to calculate, via...

We investigate the life cycle patterns of households’spending on medium value durables. We use panel data on expenditures on appliances and consumer electronics the British Household Panel Study between 1997 and 2008. In cross section, expenditures for appliances and consumer electronics...

This study compares individual preferences across incentives (i.e., hypothetical vs. real incentives) and over time (i.e. elicitation at two different points in time) in a choice experiment involving charitable donating decisions. We provide evidence of hypothetical bias but little evidence of...

Surveys and opinion polls are essential instruments to elicit societal preferences and uncover differences between socioeconomic or demographic groups. However, survey data is noisy, and survey bias is ubiquitous, limiting the reliability and usefulness of standard analyses. We provide a new...

This paper develops two straightforward value of life models; one is a probabilistic value of life model and the second is a determinstic value of time model. Simplifying assumptions allow both models to be solved analytically. Constant relative risk aversion utility functions are used, and both...

Carroll and Kimball (1996) prove that the consumption function is concave if infinitely-lived risk-averse households have a utility function which exhibits Hyperbolic Absolute Risk Aversion (HARA), face income uncertainty, and are prudent. However, the empirical evidence is inconclusive about...

Many studies document failures of expected utility's key assumption, the independence axiom. Here, we show that independence can be decomposed into two distinct axioms - betweenness and homotheticity - and that these two axioms are necessary and sufficient for independence. Thus, independence...