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Bounded Rationality in Choice over Effort and Money| old_uid | 19678 |
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| title | Bounded Rationality in Choice over Effort and Money |
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| start_date | 2021/11/26 |
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| schedule | 11h15-12h30 |
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| online | no |
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| summary | We study risk preferences in the money and the effort domain using an experimental setup with real incentives. In both domains subjects were exposed to triplets of lotteries with equal terminal outcome distributions but varying description frame (gain, loss and mixed). We present our results in three parts : In a first part, we propose a series of non-parametric tests that shed light on the description variance and domain-dependence of risk preferences. We examine a number of critical predictions of reference dependence proposed in the literature, such as diminishing sensitivity, reflection and prospect-theory loss aversion. In a second part, we introduce a model-free method for identifying rationality types. Our method yields a parsimonious characterization of description (in-)variance in our sample. We pose the questions whether individuals’ degree of rationality is consistent across outcome domains and whether the documented departures from neoclassic model predictions are quantitatively relevant. In a third part, we calibrate a structural behavioral model and derive an individual-specific index of asset integration. Our comprehensive description of heterogeneity in bounded rationality provides novel insights on the descriptive accuracy and external validity of popular theories of choice under risk. Co-authors : Alexander Koch and Julia Nafziger. |
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| responsibles | Le Lec, Laslier |
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