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The empirical relationship between nonstandard economic behaviors
Mark Dean1, Pietro Ortoleva2,3
1Department of Economics, Columbia University, New York, NY 10027.
Summary
This study reveals significant links between economic behaviors like risk and time preference. Findings support some unified models of economic choice but not all, highlighting overconfidence and gender influences.
Area of Science:
- Behavioral Economics
- Decision Science
- Experimental Economics
Background:
- Existing models of economic choice often focus on isolated phenomena.
- A unified, parsimonious model is needed to explain diverse economic behaviors.
- Understanding the interrelationships between different behavioral measures is crucial.
Purpose of the Study:
- To investigate the joint distribution of 11 behavioral phenomena.
- To compare observed behavioral patterns with predictions from existing economic models.
- To inform the development of a general model of economic choice.
Main Methods:
- Conducted experiments with 190 laboratory subjects.
- Measured 11 distinct behavioral phenomena.
- Analyzed correlations between different measures and compared them to model predictions.
Main Results:
- Found strong correlations between risk and time preference measures.
- Observed significant links between compound lottery and ambiguity aversion.
- Identified a correlation between loss aversion and the endowment effect.
- Overconfidence and gender were predictive of certain behaviors.
Conclusions:
- Results partially support existing attempts to unify behavioral economic phenomena.
- The findings suggest that a comprehensive model of economic choice must account for these interdependencies.
- Further research is needed to refine general models of economic decision-making.
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