Individual and couple decision behavior under risk: evidence on the dynamics of power balance

Palma, André de; Picard, Nathalie; Ziegelmeyer, Anthony

doi:10.1007/s11238-009-9179-6

Cited by 51 publications

(38 citation statements)

References 28 publications

(22 reference statements)

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“…The parameters σ and δ can again be estimated using maximum likelihood. Some error models assume that in each choice situation a new PT model is chosen according to some probability distribution over δ (de Palma et al 2011). For example, the exponent in the power (CRRA) utility function may be determined randomly for each choice.…”

Section: Calibration and Estimationmentioning

confidence: 99%

Beware of black swans: Taking stock of the description–experience gap in decision under uncertainty

et al. 2014

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Uncertainty pervades most aspects of life. From selecting a new technology to choosing a career, decision makers rarely know in advance the exact outcomes of their decisions. Whereas the consequences of decisions in standard decision theory are explicitly described (the decision from description (DFD) paradigm), the consequences of decisions in the recent decision from experience (DFE) paradigm are learned from Mark Lett (2014) experience. In DFD, decision makers typically overrespond to rare events. That is, rare events have more impact on decisions than their objective probabilities warrant (overweighting). In DFE, decision makers typically exhibit the opposite pattern, underresponding to rare events. That is, rare events may have less impact on decisions than their objective probabilities warrant (underweighting). In extreme cases, rare events are completely neglected, a pattern known as the "Black Swan effect." This contrast between DFD and DFE is known as a description-experience gap. In this paper, we discuss several tentative interpretations arising from our interdisciplinary examination of this gap. First, while a source of underweighting of rare events in DFE may be sampling error, we observe that a robust description-experience gap remains when these factors are not at play. Second, the residual description-experience gap is not only about experience per se but also about the way in which information concerning the probability distribution over the outcomes is learned in DFE. Econometric error theories may reveal that different assumed error structures in DFD and DFE also contribute to the gap.

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Section: Calibration and Estimationmentioning

confidence: 99%

Beware of black swans: Taking stock of the description–experience gap in decision under uncertainty

et al. 2014

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“…By construction, the researchers then have both measures of the individual preferences and of the joint choices, and can thus explain the joint choices with the individual preferences. This approach has been used to study household decision making in many different domains, such as risk taking (Bateman and Munro, 2005;Iversen et al, 2006;Munro et al, 2008;de Palma et al, 2010), consumption choices (Arora and Allenby, 1999;Browning and Chiappori, 1998), behavior in social dilemma 3 situations (Cochard et al, 2010), and stated preferences (Quiggin, 1998;Dosman and Adamowicz, 2006;Strand, 2007;Beharry-Borg et al, 2009). …”

Section: Introductionmentioning

confidence: 99%

Household decision making in rural China: Using experiments to estimate the influences of spouses

Carlsson

Martinsson

et al. 2012

Journal of Economic Behavior & Organization

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Many economic decisions are made jointly within households. This raises the question about spouses' relative influence on joint decisions and the determinants of relative influence. Using a controlled experiment (on inter-temporal choice), we let each spouse first make individual decisions and then make joint decisions with the other spouse. We use a random parameter probit model to measure the relative influence of spouses on joint decisions. In general, husbands have a stronger influence than wives. However, in richer households and when the wife is older than the husband, we find a significantly stronger influence of the wife on joint decisions.

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“…They find that choices made by couples are typically more risk averse than choices made by individuals. However, experiments conducted by de Palma et al (2011) in Germany, and later on by Picard and de Palma in France suggest that decisions made by couples are more rational (that is, fewer violations of transitivity are observed) than decisions made by individuals.…”

Section: Collection and Analysis Of Subjective And Experimental Datamentioning

confidence: 99%

Process and context in choice models

et al. 2012

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We develop a general framework that extends choice models by including an explicit representation of the process and context of decision making. Process refers to the steps involved in decision making. Context refers to factors affecting the process, focusing in this paper on social networks. The extended choice framework includes more behavioral richness through the explicit representation of the planning process preceding an action and its dynamics and the effects of context (family, friends, and market) on the process leading to a choice, as well as the inclusion of new types of subjective data in choice models. We discuss the key issues involved in applying the extended framework, focusing on richer data requirements, theories, and models, and present three partial demonstrations of the proposed framework. Future research challenges include the development of more comprehensive empirical tests of the extended modeling framework.

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Individual and couple decision behavior under risk: evidence on the dynamics of power balance

Cited by 51 publications

References 28 publications

Beware of black swans: Taking stock of the description–experience gap in decision under uncertainty

Beware of black swans: Taking stock of the description–experience gap in decision under uncertainty

Household decision making in rural China: Using experiments to estimate the influences of spouses

Process and context in choice models

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