This paper presents an overlapping generations household model with positive assortative matching, incomplete information about partner’s type and a gender pay gap on the labor market. In equilibrium, a gender pay gap creates an excess supply of desirable husbands and women marry early to increase their chance of being matched with an ideal partner, which results in a gender age gap on the marriage market. A modified model with asymmetric information yields a similar result. An extended model where individuals have (...) an option to remain single yields a similar result as well. (shrink)

Human agents happen to judge that a conjunction of two terms is more probable than one of the terms, in contradiction with the rules of classical probabilities—this is the conjunction fallacy. One of the most discussed accounts of this fallacy is currently the quantum-like explanation, which relies on models exploiting the mathematics of quantum mechanics. The aim of this paper is to investigate the empirical adequacy of major quantum-like models which represent beliefs with quantum states. We first argue that they (...) can be tested in three different ways, in a question order effect configuration which is different from the traditional conjunction fallacy experiment. We then carry out our proposed experiment, with varied methodologies from experimental economics. The experimental results we get are at odds with the predictions of the quantum-like models. This strongly suggests that this quantum-like account of the conjunction fallacy fails. Future possible research paths are discussed. (shrink)

According to the orthodox treatment of risk preferences in decision theory, they are to be explained in terms of the agent's desires about concrete outcomes. The orthodoxy has been criticised both for conflating two types of attitudes and for committing agents to attitudes that do not seem rationally required. To avoid these problems, it has been suggested that an agent's attitudes to risk should be captured by a risk function that is independent of her utility and probability functions. The main (...) problem with that approach is that it suggests that attitudes to risk are wholly distinct from people's (non-instrumental) desires. To overcome this problem, we develop a framework where an agent's utility function is defined over chance propositions (i.e., propositions describing objective probability distributions) as well as ordinary (non-chance) ones, and argue that one should explain different risk attitudes in terms of different forms of the utility function over such propositions. (shrink)

The desirability of what actually occurs is often influenced by what could have been. Preferences based on such value dependencies between actual and counterfactual outcomes generate a class of problems for orthodox decision theory, the best-known perhaps being the so-called Allais Paradox. In this paper we solve these problems by extending Richard Jeffrey's decision theory to counterfactual prospects, using a multidimensional possible-world semantics for conditionals, and showing that preferences that are sensitive to counterfactual considerations can still be desirability maximising. We (...) end the paper by investigating the conditions necessary and sufficient for a desirability function to be an expected utility. It turns out that the additional conditions imply highly implausible epistemic principles. (shrink)

(2013). Why humans are (sometimes) less rational than other animals: Cognitive complexity and the axioms of rational choice. Thinking & Reasoning: Vol. 19, No. 1, pp. 1-26. doi: 10.1080/13546783.2012.713178.

This paper presents an axiomatization of the principle of maximizing expected utility that does not rely on the independence axiom or sure-thing principle. Perhaps more importantly the new axiomatization is based on an ex ante approach, instead of the standard ex post approach. An ex post approach utilizes the decision maker's preferences among risky acts for generating a utility and a probability function, whereas in the ex ante approach a set of preferences among potential outcomes are on the input side (...) of the theory and the decision maker's preferences among risky acts on the output side. (shrink)

Good’s theorem is the apparent platitude that it is always rational to ‘look before you leap’: to gather information before making a decision when doing so is free. We argue that Good’s theorem is not platitudinous and may be false. And we argue that the correct advice is rather to ‘make your act depend on the answer to a question’. Looking before you leap is rational when, but only when, it is a way to do this.

Grant and Quiggin suggest that agents employ heuristics to constrain the set of acts under consideration before applying standard decision theory, based on their restricted model of the world to the remaining acts. The aim of this paper is to provide an axiomatic foundation, and an associated representation theorem, for the preference model proposed by Grant and Quiggin. The unawareness of the agent is encoded both in the specification of the states and in an elaboration of the set of consequences. (...) We illustrate how the representation can be applied to rationalize two notions of the precautionary principle that were proposed and discussed in Grant and Quiggin. (shrink)

In comparing different risk elicitation methods under the assumptions of expected utility theory, previous studies have found significant differences in the elicited risk attitudes. This paper extends this line of research to consider cumulative prospect theory by comparing risk attitudes and probability weightings determined using two elicitation methods: the method by Tanaka et al. :557–571, 2010; TCN method) and the method by Wakker and Deneffe :1131–1150, 1996; WD method). We demonstrate that the two methods reveal significantly different mean values for (...) the measured risk attitudes. Participants are classified on average as moderately risk-averse using the TCN method, whereas the same individuals are classified as nearly risk-neutral using the WD method. Moreover, we find that on average, participants overweight low probabilities and underweight high probabilities to a greater extent with the WD method than with the TCN method. Therefore, the different elicitation methods, that both consider probability weighting, can lead to different measured values of risk attitude and probability weighting. (shrink)

Recent work has formally linked the traditional axiomatisation of incomplete preferences à la Anscombe-Aumann with the theory of desirability developed in the context of imprecise probability, by showing in particular that they are the very same theory. The equivalence has been established under the constraint that the set of possible prizes is finite. In this paper, we relax such a constraint, thus de facto creating one of the most general theories of rationality and decision making available today. We provide the (...) theory with a sound interpretation and with basic notions, and results, for the separation of beliefs and values, and for the case of complete preferences. Moreover, we discuss the role of conglomerability for the presented theory, arguing that it should be a rationality requirement under very broad conditions. (shrink)

Different applications of synthetic biology are alike in that their possible negative consequences are highly uncertain, potentially catastrophic, and perhaps irreversible; therefore, they are also alike in that public attitudes about them are fertile ground for behavioral economic phenomena. Findings from behavioral economics suggest that people may not respond to such applications according to the normal rules of economic evaluation, by which the value of an outcome is multiplied by the mathematical probability that the outcome will occur. Possibly, then, synthetic (...) biology applications challenge the normative postulates of the standard approach, too.I want to first consider how some of the phenomena described by behavioral economists—and behavioral scientists more broadly—might affect people's perceptions of the uncertainties associated with synthetic biology. My analysis will be far from complete, however, because behavioral economics is essentially the study of human behavior, and thus its reach is potentially vast and its development longstanding and ongoing. Nonetheless, I hope to give an indicative perspective on how some aspects of behavioral economics might affect the assessment and perceived acceptability of synthetic biology. I will then consider the issue of agency. Should policy‐makers respect people's reactions to synthetic biology when those reactions are known to be driven by behavioral economic phenomena rather than following the normative postulates of rational choice theory? Or should policy‐makers dismiss these reactions as inherently biased? I will argue that the normative force of these human reactions (probably) depends on phenomenon and context. (shrink)

In decision theory, the betweenness axiom postulates that a decision maker who chooses an alternative A over another alternative B must also choose any probability mixture of A and B over B itself and can never choose a probability mixture of A and B over A itself. The betweenness axiom is a weaker version of the independence axiom of expected utility theory. Numerous empirical studies documented systematic violations of the betweenness axiom in revealed individual choice under uncertainty. This paper shows (...) that these systematic violations can be linked to another behavioral regularity—choice shifts in a group decision making. Choice shifts are observed if an individual faces the same decision problem but makes a different choice when deciding alone and in a group. (shrink)