Distinguishing Probability Weighting from Risk Misperceptions in Field Data

S-Tier
Journal: American Economic Review
Year: 2013
Volume: 103
Issue: 3
Pages: 580-85

Score contribution per author:

2.011 = (α=2.01 / 4 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We outline a strategy for distinguishing rank-dependent probability weighting from systematic risk misperceptions in field data. Our strategy relies on singling out a field environment with two key properties: (i) the objects of choice are money lotteries with more than two outcomes; and (ii) the ranking of outcomes differs across lotteries. We first present an abstract model of risky choice that elucidates the identification problem and our strategy. The model has numerous applications, including insurance choices and gambling. We then consider the application of insurance deductible choices and illustrate our strategy using simulated data.

Technical Details

RePEc Handle
repec:aea:aecrev:v:103:y:2013:i:3:p:580-85
Journal Field
General
Author Count
4
Added to Database
2026-01-24