Journal of Risk and Uncertainty最新文献

Little is known about how people's beliefs concerning the Coronavirus Disease 2019 (COVID-19) influence their behavior. To shed light on this, we conduct an online experiment ( $n=3,610$ ) with US and UK residents. Participants are randomly allocated to a control group or to one of two treatment groups. The treatment groups are shown upper- or lower-bound expert estimates of the infectiousness of the virus. We present three main empirical findings. First, individuals dramatically overestimate the dangerousness and infectiousness of COVID-19 relative to expert opinion. Second, providing people with expert information partially corrects their beliefs about the virus. Third, the more infectious people believe that COVID-19 is, the less willing they are to take protective measures, a finding we dub the "fatalism effect". We develop a formal model that can explain the fatalism effect and discuss its implications for optimal policy during the pandemic.

Expected Utility Theory (EUT) provides axioms for maximizing utility in risky choice. The Independence Axiom (IA) is its most demanding axiom: preferences between two options should not change when altering both options equally by mixing them with a common gamble. We tested common consequence (CC) and common ratio (CR) violations of the IA over several months in thousands of stochastic choices using a large variety of binary option sets. Three monkeys showed consistently few outright Preference Reversals (8%) but substantial graded Preference Changes (46%) between the initial preferred gamble and the corresponding altered gamble. Linear Discriminant Analysis (LDA) indicated that gamble probabilities predicted most Preference Changes in CC (72%) and CR (88%) tests. The Akaike Information Criterion indicated that probability weighting within Cumulative Prospect Theory (CPT) explained choices better than models using Expected Value (EV) or EUT. Fitting by utility and probability weighting functions of CPT resulted in nonlinear and non-parallel indifference curves (IC) in the Marschak-Machina triangle and suggested IA non-compliance of models using EV or EUT. Indeed, CPT models predicted Preference Changes better than EV and EUT models. Indifference points in out-of-sample tests were closer to CPT-estimated ICs than EV and EUT ICs. Finally, while the few outright Preference Reversals may reflect the long experience of our monkeys, their more graded Preference Changes corresponded to those reported for humans. In benefitting from the wide testing possibilities in monkeys, our stringent axiomatic tests contribute critical information about risky decision-making and serves as basis for investigating neuronal decision mechanisms.

Supplementary information: The online version contains supplementary material available at 10.1007/s11166-022-09388-7.

We experimentally test for the role of choice uncertainty in generating "endowment effects" - the robust empirical finding that endowing participants with an item raises their reported valuation relative to participants being asked to purchase it instead. While there is some compelling evidence concerning trade uncertainty in the literature, there is substantially less evidence regarding the importance of choice uncertainty. This paper provides novel support for the significance of choice uncertainty in the context of both trading and stated valuations. In a primary set of studies, we find that reducing choice uncertainty eliminates under-trading in the exchange setting and decreases (but does not eliminate) the difference in average valuations reported by buyers and sellers, mainly by decreasing the number of extreme valuations by sellers. Interestingly, our treatment does not lead to a significant increase in the number of mutually acceptable trades implied by stated valuations. Comparing the results from our two primary experiments therefore suggests that value uncertainty continues to play a role in generating valuation asymmetries even after relevant product uncertainty has been resolved. A set of follow-up studies with modified designs replicates this finding in the exchange setting but fails to generate a valuation asymmetry in the control condition, possibly due to pandemic-related mitigation measures and less participant time with the endowed item.

Supplementary information: The online version contains supplementary material available at 10.1007/s11166-022-09387-8.