We show that if an agent is uncertain about the precise form of his utility function, his actual relative risk aversion may depend on wealth even if he knows his utility function lies in the class of constant relative risk aversion (CRRA) utility functions. We illustrate the consequences of this...

How can a standardized product survive in a mass-customized world? This requires understanding that consumers often experience problems predicting their future hedonic reactions to new experiences (such as custom products), leading to feelings of regret. This form of regret occurs not because...

When purchase and consumption decisions are separated in time and when future utility is state dependent, consumers may desire to pursue consumption flexibility by purchasing different products together (multiple buying). This paper analyzes the effects of consumption flexibility on competing...

This paper studies the possibility of reconciling riskless and risky utility measures of health status by interpreting the latter using some assumptions of Kahneman and Tversky?s prospect theory: probability weighting and loss aversion. It also suggests that some biases in health states utility...

We show that if an agent is uncertain about the precise form of his utility function, his actual relative risk aversion may depend on wealth even if he knows his utility function lies in the class of constant relative risk aversion (CRRA) utility functions. We illustrate the consequences of this...

We examine consumer certainty of future preferences and overconfidence in predicting future preferences. We explore how preference certainty and overconfidence impact the option value to revise today’s decisions in the future. We design a laboratory experiment that creates a controlled choice...

Stochastic relative preferences are prevalent in the literature, but it appears that modeling them is not trivial. This paper establishes that common stochastic specifications alter average relative preferences, which could induce spurious effects. A simple solution is presented that provides an...