WP 2012

WP 2012-10 Scoring Rules for Subjective Probability Distributions

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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 »

WP 2012-09 Eliciting Subjective Probabilities with Binary Lotteries

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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 [2013] found that the binary lottery procedure works robustly to induce risk neutrality when subjects are given… more »

WP 2012-08 Subjective Bayesian Beliefs

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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 »

WP 2012-07 Portfolio Manager Ownership and Mutual Fund Risk Taking

Posted On January 7, 2012
Categories Working Papers, WP 2012

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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 »

WP 2012-06 Ability or Finances as Constraints on Entrepreneurship? Evidence from Survival Rates in a Natural Experiment

Posted On January 6, 2012
Categories Working Papers, WP 2012

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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 »

WP 2012-05 Reduction of Compound Lotteries with Objective Probabilities: Theory and Evidence

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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 »

WP 2012-03 Limited enforcement, bubbles and trading in incomplete markets

Posted On January 3, 2012
Categories Working Papers, WP 2012

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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 »

WP 2012-02 Inducing Risk Neutral Preferences with Binary Lotteries: A Reconsideration

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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 »