Published in 2016 in The Journal of Risk and Insurance, Volume 83, Issue 1.
ABSTRACT. We estimate the maximum amount that Danish households are willing to pay for three different types of insurance: auto, home and house insurance. We use a unique combination of claims data from the largest private insurance… more »
Published in 2017 in Journal of Economic Behavior & Organization, Volume 134.
ABSTRACT: Subjective beliefs are elicited routinely in economics experiments. However, such elicitation often suffers from two possible disadvantages. First, beliefs are recovered in the form of a summary statistic, usually the mean, of the underlying latent distribution. Second, recovered beliefs… more »
Published in 2014 in Journal of Economic Behavior & Organization, Volume 101.
ABSTRACT. We evaluate the binary lottery procedure for inducing risk neutral behavior in a subjective belief elicitation task. Harrison, Martínez-Correa and Swarthout  found that the binary lottery procedure works robustly to induce risk neutrality when subjects are given… more »
Published in 2015 in Journal of Risk & Uncertainty, Volume 50.
ABSTRACT. 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… more »
ABSTRACT. This study examines the effects of portfolio manager ownership on the risk-taking behavior of mutual funds. Using both return-based and holding-based risk measures, we find that funds managed by portfolio managers with higher beneficial ownership exhibit lower risk. In particular, using holding-based risk-shifting measure and a difference-in-differences approach, we find that… more »
ABSTRACT. We use a natural experiment in Denmark to test the hypothesis that aspiring entrepreneurs face financial constraints because of low entrepreneurial quality. We identify 304 constrained entrepreneurs who start a business after receiving windfall wealth and examine the performance of these marginal entrepreneurs. We find that constrained entrepreneurs have significantly lower… more »
Published in 2015 in Journal of Economic Behavior & Organization, Volume 119.
ABSTRACT. The reduction of compound lotteries (ROCL) has assumed a central role in the evaluation of behavior towards risk and uncertainty. We present experimental evidence on its validity in the domain of objective probabilities. Our experiment explicitly recognizes the… more »
ABSTRACT. Not-too-tight (NTT) debt limits are endogenous restrictions on debt that prevent agents from defaulting and opting for a specified continuation utility, while allowing for maximal credit expansion (Alvarez and Jermann 2000). For an agent facing some fixed prices for the Arrow securities, we prove that discounted… more »
ABSTRACT. Rational bubbles are believed to be fragile and unable to explain the trading frenzy associated to price run-ups. With limited enforcement of credit contracts and endogenous debt limits designed to prevent default and allow for maximal credit expansion, a large class of bubbles can be introduced in asset prices by appropriately… more »
Published in 2013 in Journal of Economic Behavior & Organization, Volume 94.
ABSTRACT. We evaluate the binary lottery procedure for inducing risk neutral behavior. We strip the experimental implementation down to bare bones, taking care to avoid any potentially confounding assumptions about behavior having to be made. In particular, our evaluation… more »