We use data on households' deductible choices in auto and home insurance to estimate a structural model of risky choice that incorporates standard risk aversion (concave utility over final wealth), loss aversion, and nonlinear probability weighting. Our estimates indicate that nonlinear...

We use data on insurance deductible choices to estimate a structural model of risky choice that incorporates standard risk aversion (diminishing marginal utility for wealth) and probability distortions. We find that probability distortions - characterized by substantial overweighting of small...

We use data on households' deductible choices in auto and home insurance to estimate a structural model of risky choice that incorporates "standard" risk aversion (concave utility over final wealth), loss aversion, and nonlinear probability weighting. Our estimates indicate that nonlinear...

We use data on insurance deductible choices to estimate a structural model of risky choice that incorporates "standard" risk aversion (diminishing marginal utility for wealth) and probability distortions. We find that probability distortions - characterized by substantial overweighting of small...

We provide an axiomatic approach to a belief formation process in an informational environment characterized by limited, heterogenous and differently precise information. For a list of previously observed cases an agent needs to express her belief by assigning probabilities to possible outcomes....

An agent wants to derive her belief over outcomes based on past observations collected in her database (memory). There is well establish evidence in the psychology and marketing literature that agents consistently fail (or choose not) to process all available information. An agent might be...

The idea that consumers are rational decision makers, who carefully consider options when making a decision about a certain phenomenon, will soon phase out! Believe it or not. In a bid to better understand the consumer, a myriad of economists still waste their precious time on “not-so-deep”...

The standard assumption in economics is that people have well-defined preferences and are able to specify their preferred choice. This is usually adopted by experimenters, when eliciting preferences, by asking subjects to choose between two options: "I choose option A" or "I choose option B"....

The decision maker is assumed to observe a large number of experiments. The paper presents conditions for the existence of a unique prior over distributions that generate each of the observed samples. The axioms over experiments admit a recursive non-expected utility representation over...

We investigate the implications of Salience Theory for the classical preference reversal phenomenon, where monetary valuations contradict risky choices. It has been stated that one factor behind reversals is that monetary valuations of lotteries are inflated when elicited in isolation, and that...