Two comparative models of intertemporal choice have recently been proposed as an alternative to the hyperbolic discounting model. One, the interval discounting model, retains the notion that intertemporal choice is governed by discounting, but proposes that discounting involves direct...

Markowitz hypothesized a fourfold pattern of risk preferences, with risk aversion for large gains and small losses, but risk seeking for small gains and large losses. We test his hypothesis, and obtain two major results. One is the dispersion effect: A majority exhibits risk seeking and risk...

The delay-speedup asymmetry is that a positive outcome is discounted more, and a negative outcome is discounted less, when it is delayed than when it is “sped up” over the same interval. To account for this asymmetry, Loewenstein and Prelec's (1992) hyperbolic discounting model and Scholten...

It is commonly assumed that people make intertemporal choices by ‘discounting' the value of delayed outcomes, assigning discounted values independently to all options, and comparing the discounted values. We identify a class of anomalies to such alternative-based discounting, which...

This paper investigates strategic thinking in the fictional world of Edgar Allan Poe's “The Purloined Letter.” This short story has been rightly celebrated for its explicit analysis of strategic reasoning in which players attempt to outwit one another, which involves accounting for how they...

Rational choice theory assumes agents have a set of basic preferences, and specifies rationality conditions that much be met to optimally satisfy those preferences. Most experimental studies in behavioural economics are either explicit tests of whether actual behaviour conforms to these...

A large literature suggests that many individuals do not apply Bayes Rule correctly when making decisions that depend on them correctly pooling prior information and sample data. We replicate and extend a classic experimental study of Bayesian updating from psychology, employing the methods of...

Several authors have reported an unconditional size effect in returns around earnings announcements. In this study we show how this finding can be understood as resulting from ambiguity aversion. We hypothesize that analyst forecasts for smaller companies are relatively more ambiguous; hence...