Working Papers

WP 2017_04 The Methodologies of Behavioral Econometrics

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Forthcoming – Philosophy and Interdisciplinary Social Science: A Dialogue

ABSTRACT: Behavioral econometrics is one part of a methodological trinity that includes theory, data collection and econometrics. Sometimes, on a good methodological day, there are few demands on the econometrician and the data can just be described and summarized, or elementary statistical… more »

WP 2017-03 Welfare Effects of Insurance Contract Non-Performance

Posted On February 16, 2017
Categories Working Papers, WP 2017

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ABSTRACT: Non-performance lies at the heart of much of the regulation that insurance companies face. We provide a behavioral evaluation of the welfare effects of non-performance risk, keeping close to the canonical theoretical framework of Doherty and Schlesinger [1990]. We find that there is a significant reduction in efficiency, our preferred… more »

WP 2017-02 Disordered Gambling Prevalence: Methodological Innovations in a General Danish Population Survey

Posted On February 13, 2017
Categories Working Papers, WP 2017

*Note that this paper was previously listed as WP 2016-02 Gambling Problems in the General Danish Population: Survey Evidence, and then was inadvertently reposted as 2017-02. Both links should direct you to this page, and should there be any newer versions, we will update this page.

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ABSTRACT: We study Danish adult… more »

WP 2017-01 The Empirical Adequacy of Cumulative Prospect Theory and its Implications for Normative Assessment

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Published in 2017 in Journal of Economic Methodology, Volume 24, Number 2.

ABSTRACT: Much behavioral welfare economics assumes that expected utility theory (EUT) does not accurately describe most human choice under risk. A substantial literature instead evaluates welfare consequences by taking cumulative prospect theory (CPT) as the natural default alternative, at… more »

WP 2016-12 Stochastic distortion and stochastic distorted copula

Posted On December 20, 2016
Categories Working Papers, WP 2016

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ABSTRACT: Motivated by the wide applications of distortion function and copulas in insurance and finance, this paper generalizes the notion of deterministic distortion function to a stochastic distortion function, i.e., a random process, and employs the defined stochastic distortion function to construct a so-called stochastic distorted copula. One method for constructing… more »

WP 2016-11 Once Bitten, Twice Shy: The Role of Inertia and Personal Experience in Risk Taking

Posted On November 14, 2016
Categories Working Papers, WP 2016

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ABSTRACT: We study how inertia and personal experiences affect individual risk taking. Our research design relies on active portfolio decisions relating to inheritances to separate the effect of personal experiences from inertia, which otherwise would be observationally equivalent. Experience derives from investments in banks that defaulted following the financial crisis. We… more »

WP 2016-10 Fire Sales and House Prices: Evidence from Estate Sales due to Sudden Death

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Published in 2017 in Management Science, Volume 63, Number 1.

ABSTRACT: This study investigates when forced sales of real estate turn into fire sales by using a natural experiment which allows us to separate supply and demand effects: Forced sales result from sudden death of house owners and are thus unrelated… more »

WP 2016-09 Psychiatric Measures of Gambling Problems in the General Population: A Reconsideration

Posted On November 3, 2016
Categories Working Papers, WP 2016

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ABSTRACT: Gambling behavior is pervasive, apparently growing, and of methodological and substantive interest to economists. We examine the manner in which the population prevalence of disordered gambling has been estimated. General population surveys have deepened our knowledge of the population prevalence of gambling disorders, as well as the manner in which… more »

WP 2016_08 The Psychology of Human Risk Preferences and Vulnerability to Scare-Mongers: Experimental Economic Tools for Hypothesis Formulation and Testing

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Published in 2016 in Journal of Cognition and Culture, Volume 16, Issue 5.

ABSTRACT: The Internet and social media have opened niches for political exploitation of human dispositions to hyper-alarmed states that amplify perceived threats relative to their objective probabilities of occurrence. Researchers should aim to observe the dynamic “ramping up”… more »