This paper studies, theoretically and empirically, the role of overconfidence in political behavior. Our model beliefs predicts that leads to ideological extremeness, increased voter turnout, stronger partisan identification. The also makes nuanced predictions about patterns ideology society. These are tested using unique data measure standard characteristics a nationwide sample over 3,000 adults. numerous find strong support these data. In particular, we document is substantively...

We conduct an experiment in which subjects face the same questions repeated multiple times, with repetitions of two types: (1) following literature, are distant from each other; (2) a novel treatment, row, and told that will be repeated. find large majority exhibit stochastic choice both cases. discuss implications for models choice.

This paper develops axiomatically a revealed preference theory of reference-dependent choice behavior. Instead taking the reference for an agent as exogenously given in description problem, we suitably relax Weak Axiom Revealed Preference to obtain, endogenously, existence alternatives well structure behavior conditional on those alternatives. We show how this model captures some well-known patterns such attraction effect. (JEL D11, D81)

Many violations of the Independence axiom Expected Utility can be traced to subjects' attraction risk-free prospects.Negative Certainty Independence, key in this paper, formalizes tendency.Our main result is a utility representation all preferences over monetary lotteries that satisfy Negative together with basic rationality postulates.Such represented as if agent were unsure how risk averse when evaluating lottery p; instead, she has mind set possible functions outcomes and displays...

Bayes' rule has two well-known limitations: 1) it does not model the reaction to zero-probability events; 2) a sizable empirical evidence documents systematic violations of it. We characterize axiomatically an alternative updating rule, Hypothesis Testing model. According it, agent follows if she receives information which assigned probability above threshold. Otherwise, looks at prior over priors, updates using for second-order and chooses updated priors assigns highest likelihood. also...

We investigate the classical Anscombe–Aumann model of decision-making under uncertainty without completeness axiom. distinguish between dual traits "indecisiveness in beliefs" and tastes." The former is captured by Knightian model, latter single-prior expected multi-utility model. characterize axiomatically Then we show that, independence continuity, these two models can be jointly characterized means a partial property.

When choosing between options, such as food items presented in plain view, people tend to choose the option they spend longer looking at. The prevailing interpretation is that visual attention increases value. However, previous studies, ‘value’ was coupled a behavioural goal, since subjects had item preferred. This makes it impossible discern if has an effect on value, or, instead, modulates information most relevant for goal of decision-maker. Here, we present results two independent...

We study the joint distribution of 11 behavioral phenomena in a group 190 laboratory subjects and compare it to predictions existing models as step development parsimonious, general model economic choice. find strong correlations between most measures risk time preference, compound lottery ambiguity aversion, loss aversion endowment effect. Our results support some, but not all attempts unify phenomena. Overconfidence gender are also predictive some characteristics.

We study stochastic choice as the outcome of deliberate randomization. derive a general representation function where stochasticity allows agent to achieve from any set maximal element according her underlying preferences over lotteries. show that in this model captures complementarity between elements set, and thus necessarily implies violations Regularity/Monotonicity, one most common properties choice. This feature separates our approach other models, e.g., Random Utility. (JEL D80, D81)

Two of the most well known regularities observed in preferences under risk and uncertainty are ambiguity aversion Allais paradox. We study behavior an agent who can display both tendencies simultaneously. introduce a novel notion preference for hedging that applies to objective lotteries uncertain acts. show this axiom, together with other standard ones, is equivalent representation which (i) evaluates using multiple priors, as model Gilboa Schmeidler, 1989, (ii) by distorting probabilities,...

No one likes to be wrong. Previous research has shown that participants may underweight information incompatible with previous choices, a phenomenon called confirmation bias. In this paper, we argue similar bias exists in the way is actively sought. We investigate how choice influences gathering using perceptual task and find sample more from previously chosen alternative. Furthermore, higher confidence initial choice, biased sampling becomes. As consequence, when faced possibility of...

With standard models of updating under ambiguity, new information may increase the amount relevant ambiguity: set beliefs 'dilate.' We experimentally test one sharp case: agents bet on a risky urn and get that is truthful or not based draw from an Ellsberg urn. common models, dilates, value bets decreases for ambiguity-averse increases ambiguity-seeking ones. Instead, we find does change individuals, while it substantially also ambiguous urns, in which case sizable reactions to information.

We estimate 11 well-studied behavioral phenomena in a group of 190 laboratory subjects (short-term discount rates, small stakes risk aversion, present bias, loss the endowment effect, aversion to ambiguity and compound lotteries, common ratio consequence effects sender/receiver behavior trust games). study joint distribution these behaviors compare it predictions existing models as step development parsimonious, general model economic choice. find strong correlations between probability...

This article presents the results of a laboratory experiment and an online multi-country testing effect motor vehicle eco-labels on consumers. The study featured discrete choice task questions comprehension, while ten countries included measures willingness to pay comprehension. Labels focusing fuel economy or running costs are better understood, influence about money-related eco-friendly behaviour. We suggest that this comes through mental accounting economy. In absence cost saving frame,...

We study preferences over lotteries in which both the prize and payment date are uncertain. In particular, a time lottery is one fixed but random. With Expected Discounted Utility, individuals must be risk seeking (RSTL). an incentivized experiment, however, we find that almost all subjects violate this property. Our main contributions theoretical. first show within very broad class of models, includes many forms nonexpected utility discounting, it impossible to accommodate even single...

We study the pattern of correlations across a large number behavioral regularities, with goal creating an empirical basis for more comprehensive theories decision-making. elicit 21 behaviors, using incentivized survey on representative sample (n=1,000) US population. Our data show clear and relatively simple structure underlying between these measures. Using principal components analysis, we reduce variables to six corresponding clusters high correlations. examine relationship components,...

Previous research has investigated the effects of violence and warfare on individuals' well-being, mental health, individual prosociality risk aversion. This study establishes short- long-term exposure to short-term memory aspects cognitive control. Short-term is ability store information. Cognitive control capacity exert inhibition, working memory, flexibility. Both have been shown affect positively well-being societal development. We sampled Colombian civilians who were exposed either...

Abstract When choosing between options, such as food items presented in plain view, people tend to choose the option they spend longer looking at. The prevailing interpretation is that visual attention increases value. However, previous studies, ‘value’ was coupled a behavioural goal, since subjects had item preferred. This makes it impossible discern if has an effect on value, or, instead, modulates information most relevant for goal of decision-maker. Here we present results two...