Published in 2013 in Economic Theory, Volume 54, Issue 2.
ABSTRACT. Some theories of decision under risk have been critiqued with varying-payoffs calibration arguments. Such concavity calibration has no implication either for nonlinear probability transformation or for theories with variable reference points. We introduce varying-probabilities calibration that applies to both. The… more »
Published in 2012 in Oxford Economic Papers, Volume 64, Issue 2.
ABSTRACT. We show that observed choices in discounting experiments are consistent with roughly one-half of the subjects using exponential discounting and one-half using quasi-hyperbolic discounting. We characterize the latent data generating process using a mixture model which allows different subjects… more »
Published in 2012 in Theory and Decision, Volume 73, Issue 1.
ABSTRACT. We develop an extension of the familiar linear mixed logit model to allow for the direct estimation of parametric non-linear functions defined over structural parameters. Classic applications include the estimation of coefficients of utility functions to characterize risk attitudes… more »
Published in 2014 in Journal of Risk and Uncertainty, Volume 48, Issue 3.
ABSTRACT. Subjective probabilities play a central role in many economic decisions, and act as an immediate confound of inferences about behavior, unless controlled for. Several procedures to recover subjective probabilities have been proposed, but in order to recover… more »
Published in 2010 in Journal of Economic Psychology, Volume 31, Issue 4.
ABSTRACT. We make the case that psychologists should make wider use of econometric methods for the estimation of structural models. These methods involve the development of maximum likelihood estimates of models, where the likelihood function is tailored to the… more »
Published in 2011 in Applied Economics Letters, Volume 18, Issue 3.
ABSTRACT. We show that prediction markets cannot be relied on to always elicit any interesting statistic of aggregate beliefs. Formal derivations of the bets placed in prediction markets can be viewed as demands for state-contingent commodities. We provide derivations for… more »
ABSTRACT. We consider the effect of allowing for endogenous risk on behavior, in the simplest possible laboratory environment that allows us to identify effects on risk attitudes and subjective beliefs. We find that risk attitudes and subjective beliefs are indeed significantly affected by the possibility that choices might alter the probabilities in… more »
Published in 2011 in Southern Economic Journal, Volume 77, Issue 4.
ABSTRACT. Decisions with uncertain outcomes are often made by one party in settings where another party bears the consequences. Whenever an individual is delegated to make decisions that affect others, such as in the typical corporate structure, does the individual… more »
ABSTRACT. We study the risk attitudes of an important segment of the economy: managers. We conduct artefactual field experiments with 130 managers from 12 industrial companies. Our analysis is particularly careful to evaluate alternative models of decision-making under risk. In general, we find that the managers in our sample are moderately risk… more »