Raymond Fisman

Consistency and Heterogeneity of Individual Behavior under Uncertainty

Coauthor(s): Syngjoo Choi, Douglas Gale, Shachar Kariv.


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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.

Source: American Economic Review
Exact Citation:
Choi, Syngjoo, Raymond Fisman, Douglas Gale, and Shachar Kariv. "Consistency and Heterogeneity of Individual Behavior under Uncertainty." American Economic Review 97, no. 5 (2007): 1921-1938.
Volume: 97
Number: 5
Pages: 1921-1938
Date: 2007