Related papers: Outside options and risk attitude
Behavioral responses to pandemics are less shaped by actual mortality or hospitalization risks than they are by risk attitudes. We explore human mobility patterns as a measure of behavioral responses during the COVID-19 pandemic. Our…
Offline reinforcement learning (RL) is suitable for safety-critical domains where online exploration is too costly or dangerous. In such safety-critical settings, decision-making should take into consideration the risk of catastrophic…
Statistical inferential results generally come with a measure of reliability for decision-making purposes. For a policy implementer, the value of implementing published policy research depends critically upon this reliability. For a policy…
In many choice problems, the interaction between several distinct variables determines the payoff of each alternative. I propose and axiomatize a model of a decision maker who recognizes that she may not accurately perceive the correlation…
Decisions taken in our everyday lives are based on a wide variety of information so it is generally very difficult to assess what are the strategies that guide us. Stock market therefore provides a rich environment to study how people take…
A decision-maker periodically acquires information about a changing state, controlling both the timing and content of updates. I characterize optimal policies using a decomposition of the dynamic problem into optimal stopping and static…
Agents' learning from feedback shapes economic outcomes, and many economic decision-makers today employ learning algorithms to make consequential choices. This note shows that a widely used learning algorithm, $\varepsilon$-Greedy, exhibits…
We consider risk averse investors with different levels of anxiety about asset price drawdowns. The latter is defined as the distance of the current price away from its best performance since inception. These drawdowns can increase either…
People often deviate from expected utility theory when making risky and intertemporal choices. While the effects of probabilistic risk and time delay have been extensively studied in isolation, their interplay and underlying theoretical…
To survive in dynamic and uncertain environments, individuals must develop effective decision strategies that balance information gathering and decision commitment. Models of such strategies often prioritize either optimizing tangible…
Managing a portfolio to a risk model can tilt the portfolio toward weaknesses of the model. As a result, the optimized portfolio acquires downside exposure to uncertainty in the model itself, what we call "second order risk." We propose a…
An alignment is developed between the terminology of outcome oriented decision taking and a terminology for promise issuing. Differences and correspondences are investigated between the concepts of decision and promise. For decision taking,…
Restricting individuals' access to some opportunities may steer their desire toward their substitutes, a phenomenon known as the forbidden fruit effect. We axiomatize a choice model named restriction-sensitive choice (RSC), which…
We propose and axiomatize preferences on a product state space in light of uncertainty regarding the dependency of different payoff-relevant factors. Dependence structures allow to decompose probabilities and allow to pin down behavior…
We provide an overview of the relationship between financial networks and systemic risk. We present a taxonomy of different types of systemic risk, differentiating between direct externalities between financial organizations (e.g.,…
We study the associations between everyday economic decision-making quality and people's emotional states. Using high-frequency, highly disaggregated consumer "scanner" data, we show that the cost of poor decision-making is substantial, on…
We consider thin incomplete financial markets, where traders with heterogeneous preferences and risk exposures have motive to behave strategically regarding the demand schedules they submit, thereby impacting prices and allocations. We…
Understanding how competitive pressure affects risk-taking is crucial in sequential decision-making under uncertainty. This study examines these effects using bench press competition data, where individuals make risk-based choices under…
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;…
We introduce a general decision tree framework to value an option to invest/divest in a project, focusing on the model risk inherent in the assumptions made by standard real option valuation methods. We examine how real option values depend…