At least since Leonard Savage’s extension of von Neumann and Morgenstern’s expected utility, rational choice theory has been interpreted as a theory prescribing what individuals should do in any decision context, ranging from certainty to risk and uncertainty. After decades this received...

This paper reports on the results of a series of experimental laboratory elections. The novelty of the design allows me to study both coordination failures and coordination efficiency in a repeated-game, divided majority setting. I assess and compare the performance of three voting mechanisms,...

Precautionary saving typically refers to the additional investment in a risk free asset when exogenous labor income is risky versus certain. When risky income results endogenously from the investment in a risky asset, the meaning and characterization of precautionary saving change and far less...

Asset demand tests for Expected Utility have almost universally been implemented in contingent claim settings where markets are complete. However when markets are incomplete, these tests cannot be applied since contingent claim prices cannot be uniquely recovered from given asset prices and the...

In economics, the prevailing framework to explain preferences under uncerta- inty is the Expected Utility theory. Despite its widespread use, the Expected Utility theory is not free from problems. Experimental and empirical works shows that, in real life, the choices of individuals among risky...

It is often assumed that disability lowers the marginal utility of income. In this article individuals’ marginal utility of income in two states, (1) paralyzed in both legs from birth and (2) not mobility impaired at all, are measured through experimental choices between imagined lotteries...

Risk aversion is traditionally defined in the context of lotteries over monetary payoffs. This paper extends the notion of risk aversion to a more general setup where outcomes (consequences) may not be measurable in monetary terms and people may have fuzzy preferences over lotteries, i.e. they...

This paper reports the results of a meta-study of 89 prisoner's dilemma experiments comprising more than 3000 participants across 6 countries. We organize existing evidence and explain seemingly contradictory results in the existing literature by focusing on two dimensions of the dilemma:...

The paper proposes a novel way to handle the relation between decision theory and uncertainty in the context of policy design. Present risk governance is based primarily on two institutions - insurance markets and public risk governance - supported by a powerful theory: the expected utility...

The 2014 GM ignition switch recall highlighted the inadequacies of the company's safety culture and the shortcomings of regulatory sanctions. The company's inattention to systematic thinking about product safety can be traced to the hostile treatment of corporate risk analyses by the courts....