Learning under uncertainty with multiple priors: experimental investigation

Journal of Risk and Uncertainty - We run an experiment to compare belief formation and learning under ambiguity and under compound risk at the individual level. We estimate a four-type mixture...     

Experimental evidence on the irreversebility effect

This paper presents the results of an experimental investigation on how increased expected information affects subjects' choices. We show that Claude Henry's (1974) result (the Irreversibility Effect) is strongly supported by our experimental data. According to the Irreversibility Effect a rational (expected utility maximizing) agent who anticipates more information before making his future choices, will take a less irreversible position today. In our experiment, present and future choices are framed respectively as portfolio and investment decisions. The degree of irreversibility (or flexibility) chosen by experimental subjects in response to additional information indicated that subjects react to anticipated information as predicted by theory.     

Experimental evidence on case-based decision theory

This paper starts out from the proposition that case-based decision theory (CBDT) is an appropriate tool to explain human decision behavior in situations of structural ignorance. Although the developers of CBDT suggest its reality adequacy, CBDT has not yet been tested empirically very often, especially not in repetitive decision situations. Therefore, our main objective is to analyse the decision behavior of subjects in a repeated-choice experiment by comparing the explanation power of CBDT to reinforcement learning and to classical decision criteria under uncertainty namely maximin, maximax, and pessimism-optimism. Our findings substantiate a predominant significantly higher validity of CBDT compared to the classical criteria and to reinforcement learning. For this reason, the experimental results confirm the suggested reality adequacy of CBDT in repetitive decision situations of structural ignorance.     

Updating beliefs with imperfect signals: Experimental evidence

We conduct an experiment on individual choice under risk in which we study belief updating when an agent receives a signal that restricts the number of possible states of the world. Subjects observe a sample drawn from an urn and form initial beliefs about the urn??s composition. We then elicit how beliefs are modified after subjects receive a signal that restricts the set of the possible urns from which the observed sample could have been drawn. We find that this type of signal increases the frequency of correct assessments and that prediction accuracy is higher for lower levels of risk. We also show that prediction accuracy is higher after invalidating signals (i.e. signals that contradict the initial belief). This pattern is explained by the lower level of risk associated with invalidating signals. Finally, we find evidence for a lack of persistence of choices under high risk.     

School environment and risk preferences: Experimental evidence

Using a field experiment with high school students, we evaluate the development of risk preferences. Examining the impact of school characteristics on preference development reveals both peer and quality effects. For the peer effect, individuals in schools with a higher percentage of students on free or reduced lunches (hence a higher proportion of low-income peers with whom to interact) are significantly more risk averse. For the quality effect, individuals in schools with smaller class sizes and a higher percentage of educators with advanced degrees have higher, more moderate levels of risk aversion. We further discuss economic, cognitive and emotional development theories of risk preferences. Data show demographic-related patterns: girls are more risk averse on average, while taller and nonwhite individuals are more risk tolerant.     

The influence of fear in decisions: Experimental evidence

This article studies decisions made under conditions of fear, when a catastrophic outcome is introduced in a lottery. It reports on experimental results and seeks to compare the predictions of the expected utility (EU) framework with those of a new axiomatic treatment of choice under uncertainty that takes explicit account of emotions such as fear (Chichilnisky 1996, 2000, 2002, 2009). Results provide evidence that fear influences the cognitive process of decision-making by leading some subjects to focus excessively on catastrophic events. Such heterogeneity in subjects’ behavior, while not consistent with EU-based functions, is fully consistent with the new type of utility function implied by the new axioms.     

Utility theory with probability dependent outcome valuation: Extensions and applications

This article extends Karni's (1992) Utility Theory with Probability Dependent Outcome Valuation (UTP-DOV) to accommodate a wider set of preferences, and applies the new representation to a variety of decision problems under risk. First, we present a new, more general, axiomatization of UTPDOV that renders the underlying intuition more transparent. Second, we develop sufficient conditions under which UTPDOV satisfies the betweenness and the ordinal independence axioms. Finally, we examine functional forms of the UTPDOV model that are consistent with several well known departures from the independence axiom.     

Experimental evidence on the effect of incentives and domain in risk aversion and discounting tasks

Journal of Risk and Uncertainty - Environmental policy evaluation is often criticised for employing discount rates that have little grounding in research. Yet, experimental research aimed at...     

Deterrence, expected cost, uncertainty and voting: Experimental evidence

We conduct laboratory experiments to investigate the effects of deterrence mechanisms under controlled conditions. The effect of the expected cost of punishment of an individual’s decision to engage in a proscribed activity and the effect of uncertainty on an individual’s decision to commit a violation are very difficult to isolate in field data. We use a roadway speeding framing and find that (a) individuals respond considerably to increases in the expected cost of speeding, (b) uncertainty about the enforcement regime yields a significant reduction in violations committed, and (c) people are much more likely to speed when the punishment regime for which they voted is implemented. Our results have important implications for a behavioral theory of deterrence under uncertainty.     

Education and anomalies in decision making: Experimental evidence from Chinese adult twins

We estimate the effects of education on two dimensions of decision making behavior—risk and time—beyond those considered to be normal-ranged to encompass behavioral anomalies with respect to expected utility as well as time consistency. We conduct a number of incentivized choice experiments on Chinese adult twins to measure decision making behavior, and use a within-twin-pair fixed-effects estimator to deal with unobservable family-specific effects. The estimation results show that a higher education level tends to reduce the degree of risk aversion towards moderate prospects, moderate hazards, and longshot prospects. For anomalies under risk and uncertainty, college graduates exhibit significantly more Allais-type behavior compared to high school dropouts, while high school graduates exhibit more ambiguity aversion as well as a familiarity preference relative to high school dropouts. For decision making involving time, a higher education level tends to reduce the degree of impatience, and to reduce behavioral anomalies including hyperbolic discounting, dread, and hopefulness. The experimental observations suggest that people with a higher education level tend to exhibit more behavioral anomalies in risk attitudes but fewer behavioral anomalies involving time, hence implying that education has multi-functions in preference formation and human capability building. This study contributes to the understanding of the nature of these behavioral anomalies and the roles of education in human decision making.     

Either with us or against us: experimental evidence on partial cartels

This paper analyzes the coordination challenge a partial cartel faces when payoff asymmetries between potential cartel insiders and potential cartel outsiders are large. We introduce two experimental treatments: a standard treatment where a complete cartel can be supported in a Nash equilibrium and a modified treatment where a complete cartel and a partial cartel can both be supported in a Nash equilibrium. To assess the role of communication both treatments are additionally run with a “chat option,” yielding four treatments in total. Our results show that subjects frequently reject the formation of partial cartels in the modified treatments. In all treatments with communication subjects are more likely to form complete cartels than partial cartels. The implications of these results are important for antitrust: payoff asymmetries between cartel members and outsiders may jeopardize the formation of partial cartels. Yet complete cartels may be formed instead, if institutional mechanisms with frequent communication are used to form cartels.

     

Process fairness,outcome fairness,and dynamic consistency: Experimental evidence for risk and ambiguity

Literature on fairness preferences distinguishes between outcome fairness, concerning the final allocation of payoffs, and process fairness, concerning the expected allocation of payoffs. It is not obvious, however, whether process fairness can consistently be implemented. Once uncertainty is resolved and outcomes are determined, the ex-ante procedurally fair decision maker may become consequentialist ex-post, and reconsider her choice on the basis of the observed outcomes. We present experimental evidence on dynamic consistency of social preferences under both known risk and ambiguity. A significant share of people subscribe to process fairness both before and after the resolution of uncertainty.     

Measuring values: A conceptual framework for interpreting transactions with special reference to contingent valuation of visibility

People express their value for a good when they pay something for it. Interpretinggood andpayment very broadly, we offer a general analytical framework for characterizing such transactions. This framework is suitable for interpreting actual transactions as well as for creating hypothetical transactions for research purposes. It is described here both in general terms and with special application to one particular kind of transaction, contingent valuation studies in which individuals estimate the value of possible changes in atmospheric visibility. In these transactions, as in many others, risk (of undesired changes in visibility) is one principal feature; at least some uncertainty often surrounds other transaction features as well (For example: How much will visibility really change if I promise to pay for it? Will I really have to pay?). The framework presented here conceptualizes any transaction as involving (a) a good, (b) a payment, and (c) a social context within which the transaction is conducted. Each of these aspects in turn has a variety of features that might and in some cases should affect evaluations. For each such feature, the framework considers first the meaning of alternative specifications and then the difficulties of ensuring that they are understood and evaluated properly. As a whole, the framework provides an integrated approach to designing evaluation studies and interpreting their results.     

Modeling manufactured imports: Methodological issues with evidence from Australia

This paper investigates the relationship between manufactured import flow to Australia, and relative prices and domestic economic activity net of cyclical demand effects over the period 1981Q3 to 1991Q2. This is done through the estimation of import demand functions for total manufactured imports and nine major import categories using the general-to-specific modeling approach. We find that the homotheticity assumption on activity elasticity is met in most cases. The price elasticity estimates for individual categories range from 0.32 to 2.1, with a weighted average of 0.52. We also find some evidence of upward bias in price elasticity estimates when an aggregate import function is employed in a context where a significant portion of imports are subject to quantitative restrictions (QRs).     

Empirical evidence of two-attribute utility dependence on probability

We investigate utility dependence on probability using a new methodology that examines how indifference statements vary with the probability of obtaining times and costs of individual trips. Of 127 subjects, 8 supplied 3 (out of 3) sets of indifference statements consistent with probability independence. Those subjects with 2 or more sets of indifference statements violating probability independence exhibited a systematic dependence, in that knowing the direction of a subject's violation in one set of indifference statements would increase the likelihood of his or her violating other sets of indifference statements in the same direction. Data show that this systematic violation of dependence should not be attributed to artifacts of the experiment.     

数字孪生船舶与课堂、实验教学的融合探索

为促进数智化技术与船海专业教育教学深度融合,提高船舶与海洋工程专业学生掌握前沿技术的能力,与船舶行业无缝衔接,提出将数字孪生设计理念融入课堂和实验教学中,以《船舶与海洋平台设计原理》课程为例,探讨了课程体系和虚拟仿真实验平台的建设经验.通过对实际教学和实验的效果进行评估,验证将数字孪生设计理念融入课堂和实验教学的教学改...     

Interventions for families with multiple problems: Similar contents but divergent formats

For families with multiple problems (FMP), knowledge is lacking on the practice elements of interventions (the distinct techniques practitioners use to promote positive outcomes) and their program elements (intervention design and delivery systems). The aim of this study is to identify both common and specific practice and program elements so as to determine contents and overlap between interventions. For FMP, we selected interventions that had at least moderate (>0.5) effect sizes in the Dutch context (N = 8). A deductive content analysis was used to assess the manuals of these interventions with the taxonomy of interventions for FMP. We defined as common those elements found in at least five of the eight interventions and as specific those found in fewer than five. Of the practice elements, 79% were common across the interventions, and 21% were intervention specific. Interventions with the highest percentages of intervention‐specific elements derived from the taxonomy were 10 for the Future (15%), Family Central (14%), Intensive Family Therapy (14%), and Multisystemic therapy (11%). Core program elements: duration, intensity, intervision, supervision, and consultation, varied greatly between interventions. Among interventions for FMP, we found practice elements to have considerable overlap. Among program elements, we found greater variety.     

Dilemmas when working with substance abusers with multiple and complex problems: the case manager's perspective

Since the 1990s, case management has been implemented in the USA and Canada – and recently also in various European countries – to support substance abusers with multiple and complex needs. Although this intervention is often presented as a set of standardised functions, its application is often a subjective task involving various dilemmas, which may influence case management outcomes significantly. Based on a comparison of case managers' experiences in Denmark and Belgium, we focus on several core dilemmas in case management for substance abusers with complex problems. Case management practices vary from one project to the next and even within the same project. Such differences are apparently related to the way in which case managers approach dilemmas such as those existing between control versus self-determination, or between systematic versus ad-hoc planning. The conclusion is that it is vital to discuss these dilemmas during training courses and supervision meetings in order to ensure that the intended form of intervention is actually delivered on the ground.