Related papers: Optimism, overconfidence, and moral hazard
If we could define the set of all bad outcomes, we could hard-code an agent which avoids them; however, in sufficiently complex environments, this is infeasible. We do not know of any general-purpose approaches in the literature to avoiding…
I consider decision-making constrained by considerations of morality, rationality, or other virtues. The decision maker (DM) has a true preference over outcomes, but feels compelled to choose among outcomes that are top-ranked by some…
This paper presents a semi-quantitative mathematical model of the changes over time in the statistical distribution of well-being of individuals in a society. The model predicts that when individuals overvalue the more socially conspicuous…
Choice functions constitute a simple, direct and very general mathematical framework for modelling choice under uncertainty. In particular, they are able to represent the set-valued choices that typically arise from applying decision rules…
This paper studies lying in a novel context. Previous work has focused on situations in which people are either fully aware of the economic consequences of all available actions (e.g., die-under-cup paradigm), or they are uncertain, but…
We are living in an uncertain and dynamically changing world, where optimal decision-making under uncertainty is directly linked to the survival of species. However, evolutionary selection pressures that shape value-based decision-making…
It is known that the hazard ratio lacks a useful causal interpretation. Even for data from a randomized controlled trial, the hazard ratio suffers from built-in selection bias as, over time, the individuals at risk in the exposed and…
We introduce a new computational model of moral decision making, drawing on a recent theory of commonsense moral learning via social dynamics. Our model describes moral dilemmas as a utility function that computes trade-offs in values over…
This study introduces an agent-based model to study how regret, uncertainty, and social norms interact to shape vaccination behavior during epidemics. The model integrates three behavioral mechanisms, anticipated regret, evolving norms, and…
In this paper, we extend the optimal securitisation model of Pag\`es [50] and Possama\"i and Pag\`es [51] between an investor and a bank to a setting allowing both moral hazard and adverse selection. Following the recent approach to these…
We study a two-period moral hazard problem; there are two agents, with action sets that are unknown to the principal. The principal contracts with each agent sequentially, and seeks to maximize the worst-case discounted sum of payoffs,…
Humans display significant uncertainty when confronted with moral dilemmas, yet the extent of such uncertainty in machines and AI agents remains underexplored. Recent studies have confirmed the overly confident tendencies of…
Confidence is an essential ingredient of success in a wide range of domains ranging from job performance and mental health, to sports, business, and combat. Some authors have suggested that not just confidence but overconfidence-believing…
We study optimal rating design under moral hazard and strategic manipulation. An intermediary observes a noisy indicator of effort and commits to a rating policy that shapes market beliefs and pay. We characterize optimal ratings via…
This paper studies how uncertainty about problem difficulty shapes problem-solving strategies. I develop a dynamic model where an agent solves a problem by brainstorming approaches of unknown quality and allocating a fixed effort budget…
This survey reviews recent developments in revealed preference theory. It discusses the testable implications of theories of choice that are germane to specific economic environments. The focus is on expected utility in risky environments;…
This study proposes a tractable stochastic choice model to identify motivations for prosocial behavior, and to explore alternative motivations of deliberate randomization beyond ex-ante fairness concerns. To represent social preferences, we…
Selection on moral hazard represents the tendency to select a specific health insurance coverage depending on the heterogeneity in utilisation ''slopes''. I use data from the Swiss Household Panel and from publicly available regulatory data…
We propose and axiomatize a new model of incomplete preferences under uncertainty, which we call \textit{hope-and-prepare preferences}. An act is considered more desirable than an other act when, and only when, both an optimistic…
When making decisions under risk, people often exhibit behaviors that classical economic theories cannot explain. Newer models that attempt to account for these irrational behaviors often lack neuroscience bases and require the introduction…