Choi, S. and Fisman, R. and Gale, D. (2007) Consistency and heterogeneity of individual behavior under uncertainty. (ELSE Working Papers 244). ESRC Centre for Economic Learning and Social Evolution: London, UK.
![[img]](/style/images/fileicons/application_pdf.png)
| PDF - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader 421Kb |
Abstract
By using graphical representations of simple portfolio choice problems, we generate a very rich data set to study behavior under uncertainty at the level of the individual subject. We test the data for consistency with the maximization hypothesis, and we estimate preferences using a two-parameter utility function based on Faruk Gul (1991). This specification provides a good interpretation of the data at the individual level and can account for the highly heterogeneous behaviors observed in the laboratory. The parameter estimates jointly describe attitudes toward risk and allow us to characterize the distribution of risk preferences in the population.
| Type: | Working / discussion paper |
|---|---|
| Title: | Consistency and heterogeneity of individual behavior under uncertainty |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | http://else.econ.ucl.ac.uk/newweb/papers.php#2007 |
| Language: | English |
| Additional information: | Please see http://eprints.ucl.ac.uk/12656/ for details of the version published in the American Economic Review |
| Keywords: | JEL Classification: D81, C91. Uncertainty, revealed preference, Expected Utility Theory, loss/disappointment aversion, experiment |
View download statistics for this itemArchive Staff Only: edit this record