Seminars

Title: “Integrating Risk in the Timing of Outcomes”

Abstract: This study investigates human behavior when individuals make choices that are uncertain in both realization timings and outcomes. Individuals’ choice patterns are explored in controlled experiments through a new type of lottery, “two stage compound time-lottery,” in which the first stage determines the realization timing and the second stage determines the realization outcome. We first examine the validity of the standard expected utility (EU) model and find that EU fails to account for the majority of our subjects. As the alternative, we examine three non-expected utility models developed from rank dependent utility: recursive rank dependent utility (RRDU), intertemporal certainty equivalent (ICE) and rank dependent utility on discounted payments (RDUDP). The results show that individuals are heterogeneous and two choice patterns emerge. Approximately two-thirds of subjects do not reduce compound time-lotteries and their choices can be rationalized by RRDU. For the rest one-third of subjects who employ reduction, their choices can be rationalized by RDUDP. Only fewer than 7% of subjects can be rationalized by ICE or discounted expected utility.

Location: Max Gluskin House, Room 106

Date: October 16, 2024

Time: 12:10-13:30

Title: “Paternalistic Persuasion”

Abstract: Paternalistic experts (“Advisors”) often seek to make decision-makers (“Choosers”) better off by persuading them to change their behavior. Choosers, however, are often reluctant to make certain behavioral changes. To successfully persuade a Chooser to change their behavior, an Advisor should therefore give the Chooser a recommendation that accounts for this reluctance. In a setting where Choosers are wary of recommenders’ incentives, I experimentally investigate whether Advisors send recommendations that account for this wariness, and why they may fail to do so. I find that up to 79% of Advisors send sub-optimal recommendations. Instead, up to two-thirds of Advisors send recommendations that would only be optimal if Choosers were not wary. I show, however, that prompting Advisors to think about Choosers’ likely response to a recommended change is an effective way to correct this mistake. Advisors’ initial mistake is thus consistent with a failure to focus on recommendations that Choosers are likely to accept.

Location: Max Gluskin House, Room 106

Date: October 9, 2024

Time: 12:10-13:30

Title: “TBA”

Location: online

Date: October 18, 2021

Time: 16:10-17:30

Title: “Endogenous Risk Attitudes”

Location: online

Date: October 20, 2021

Time: 12:10-13:30