We evaluate the claim that bottle size formats signal quality changes, using a controlled laboratory experiment where we simultaneously auctioned two different sweet wines: a pomegranate wine and a grape wine. We varied on a between subjects basis the size of the bottle, from 500ml to 750ml, but...

We evaluate the claim that bottle size formats signal quality changes, using a controlled laboratory experiment where we simultaneously auctioned two different sweet wines: a pomegranate wine and a grape wine. We varied on a between subjects basis the size of the bottle, from 500ml to 750ml, but...

Standard random utility models can account for stochastic choice. However, a common implication is that the realized utilities are equal with probability zero. This knife-edge aspect implies that indifference is thin because arbitrarily small changes in utility will break indifference....

The paper presents an alternative interpretation of the experimental data published by Kahneman and Tversky in their 1992 study "Advances in Prospect Theory”, which describes the Cumulative version of their Prospect Theory from 1979. It was assumed that, apart from the operations made during...

This paper discusses solutions derived from lottery experiments using two alternative assumptions: that people perceive wealth changes as absolute amounts of money; and that people consider wealth changes as a proportion of some reference value dependant on the context of the problem under...

This short paper shows that the Allais Paradox and the Common Ratio Effect regarded as classic examples of the violation of the Expected Utility Theory Axioms – may be easily explained by assuming that changes in wealth (i.e. gains and losses) are perceived in relative terms. The preference...

This short paper demonstrates that the claim of Cumulative Prospect Theory (CPT) that people are risk seeking for loss prospects, which confirmed a hypothetical assumption of the earlier Prospect Theory (PT), appears to be merely a result of using a specific form of the probability weighting...

A central question in the study of altruism has been whether there is a systematic gender difference in giving behavior. Most experimental economics research has found that women are more generous than men. Evidence also suggests that gender differences depend upon the price of giving: males are...

Tipping is a multi-billion dollar phenomenon and a major source of income for millions of workers. The results of a study conducted in the US and Israel suggest that people tip mainly to show gratitude, conform to the social norm, and because they know that waiters' income depends on tips....

The article presents an experiment that illustrates a behavior that I denote “relative thinking.” Subjects in the experiment revealed the minimal price difference for which they were willing to spend 20 minutes and go to a cheaper store. Five different goods and nine different prices were...