(Non-)Parametric Recoverability of Preferences and Choice Prediction

Simple functional forms for utility require restrictive structural assumptions that are often contrary to observed behavior. Even so, they are widely used in applied economic research. I address this issue using a two-part adaptive experimental design to compare the predictions of a popular parametric model of decision making under risk to those of non-parametric bounds on indifference curves. Interpreting the latter as an approximate upper bound, I find the parametric model sacrifices very little in terms of predictive success. This suggests that, despite their restrictiveness, simple functional forms may nevertheless be useful representations of preferences over risky alternatives.

Ensuring Effective Public Health Communication: Insights and Modeling Efforts From Theories of Behavioral Economics, Heuristics, and Behavioral Analysis for Decision Making Under Risk

Public health (PH) messaging can have an enormous impact on shaping how individuals within society behave, and can ensure it is in a safe and responsible way, consistent with up-to-date evidence-based PH guidelines. If done effectively, messaging can save lives and improve the health of those within society. However, unfortunately, those within Government PH bodies typically have little training about how to effectively represent PH messages in a way that is consistent with psychological theories of cognitive bias, in order to avoid cognitively biasing the public through their messages. As a result of this, inadequate representation of PH messages can result, which can often lead to cognitive bias in those from the public who read or listen to the message information. This can lead to poor decision making of the pubic as a whole, which can then further lead to harm and even death of public members as a result of these poor decisions. One way to minimize the problem of bias in decision making is to explore psychology theories that model how bias can occur from PH messaging, and identify ways in which PH agencies can utilize such approaches to improve the effectiveness of their messages. Previous focus has been largely on behavioral economic theories, however, here, other accounts are offered in addition to these. These include theories of heuristics and theories from the behavior analysis domain, which may increase the predictive power of modeling bias, and have applications for how best to represent PH message information which minimize bias.

Does choice change preferences? An incentivized test of the mere choice effect

Widespread evidence from psychology and neuroscience documents that previous choices unconditionally increase the later desirability of chosen objects, even if those choices were uninformative. This is problematic for economists who use choice data to estimate latent preferences, demand functions, and social welfare. The evidence on this mere choice effect, however, exhibits serious shortcomings which prevent evaluating its possible relevance for economics. In this paper, we present a novel, parsimonious experimental design to test for the economic validity of the mere choice effect addressing these shortcomings. Our design uses well-defined, monetary lotteries, all decisions are incentivized, and we effectively randomize participants’ initial choices without relying on deception. Results from a large, pre-registered online experiment find no support for the mere choice effect. Our results challenge conventional wisdom outside economics. The mere choice effect does not seem to be a concern for economics, at least in the domain of decision making under risk.

Decision Making Under Risk Across Different Contexts

Decision making under risk has been intensively studied; however, little is understood about how decision making under risk changes with increased ecological validity. The current study investigated whether increased ecological validity resulted in greater decision quality and a minimization of the description-experience gap. Whether presenting items as abstract monetary gambles or framed within a meaningful context, decision quality was higher for loss items when presented as a description, and for gain items when experienced. When the rare event was a nonzero gain or loss, decision quality was increased when abstract monetary gambles were presented as a description. When the rate event was a zero gain, higher decision quality resulted if the gamble was experienced. When the rare event was a zero loss, higher decision quality resulted if the gamble was presented as a description. Implications for future research are discussed, with regard to improving understanding of decision making under uncertainty.

Decision Making Under Risk Across Different Contexts

Decision making under risk has been intensively studied; however, little is understood about how decision making under risk changes with increased ecological validity. The current study investigated whether increased ecological validity resulted in greater decision quality and a minimization of the description-experience gap. Whether presenting items as abstract monetary gambles or framed within a meaningful context, decision quality was higher for loss items when presented as a description, and for gain items when experienced. When the rare event was a nonzero gain or loss, decision quality was increased when abstract monetary gambles were presented as a description. When the rate event was a zero gain, higher decision quality resulted if the gamble was experienced. When the rare event was a zero loss, higher decision quality resulted if the gamble was presented as a description. Implications for future research are discussed, with regard to improving understanding of decision making under uncertainty.