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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 2017-01 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 2016-10 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_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 »

WP 2016_06 Varieties of Paternalism and the Heterogeneity of Utility Structures

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Forthcoming – Journal of Economic Methodology

ABSTRACT: A principal source of interest in behavioral economics has been its advertised contributions to policies aimed at ‘nudging’ people away from allegedly natural but self-defeating behavior toward patterns of response thought more likely to improve their welfare. This has occasioned controversies among economists and… more »

WP 2016_03 Old-Age Provision: Past, Present, Future

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Published in 2016 in European Actuarial Journal, Volume 6, Issue 2.

ABSTRACT: This is a summary of the main topics and findings from the Swiss Risk and Insurance Forum 2015. That event gathered experts from academia, insurance industry, regulatory bodies, and consulting companies to discuss the past and current developments and… more »

WP 2015-13 The Methodologies of Behavioral Insurance: Introduction to the Special Issue

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Published in 2016 in The Journal of Risk and Insurance, Volume 83, Issue 1.

ABSTRACT: The generic insurance product involves an agent giving up a certain amount of money ex ante some risky event in the expectation of being given some money in the future if something unfortunate occurs. It is immediate… more »

WP 2015-10 Evaluating the Expected Welfare Gain from Insurance

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Published in 2016 in The Journal of Risk and Insurance, Volume 83, Issue 1.

ABSTRACT: Economic theory tells us how to evaluate the expected welfare gain from insurance products on offer to individuals. If we know the risk preferences of the individual, and subjective beliefs about loss contingencies and likelihood of payout,… more »

WP 2015-05 Information Characteristics and Errors in Expectations: Experimental Evidence

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Forthcoming – Journal of Financial and Quantitative Analysis

ABSTRACT: The behavioral biases documented in psychology are not always robust when tested in economic conditions. We design an experiment to test the hypothesis that, in violation of Bayes Rule, some people respond more forcefully to the strength of an information signal than… more »

WP 2014-09 Eliciting Subjective Probability Distributions with Binary Lotteries

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Published in 2015 in Economic Letters, Volume 127.

ABSTRACT: We consider the elicitation of subjective belief distributions over continuous events using scoring rules with incentives. The theoretical literature suggests that risk attitudes have a surprisingly small role in distorting reports from true belief distributions. We use this theoretical prediction to test… more »