Browsing by Author "Harrison, Glenn W"

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    Regulation of choice behavior : an experiment investigating the hypothesis that people bundle sequences of expected rewards
    (2015) Schuhr, Alexander; Ross, Don; Harrison, Glenn W
    This thesis discusses reward bundling as a process that enables decision makers to self-regulate their choice behavior. Most empirical work on intertemporal choice has focused on analyzing impulsive choice. Less effort has been dedicated to explanations of how individuals manage to overcome self-defeating behavior. This thesis evaluates the theory of reward bundling. It presents a set of econometric tools that can be employed to investigate whether actual choice behavior is consistent with the theory of bundling. It reports an experiment with human subjects. Reward bundling has been demonstrated in experiments with pigeons and rats. However, no empirical study using salient rewards and sound econometric model estimation has ever been carried out with humans. The present experiment is, therefore, the first that meets the methodological standards of experimental economics and finds evidence consistent with the presence of reward bundling.
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    Stochastic models in experimental economics
    (2018) Monroe, Brian Albert; Harrison, Glenn W; Ross, Don
    Shortly after the introduction of Expected Utility Theory (EUT), economists and psychologists began publishing results that showed choices made by experimental subjects which apparently violate one or more of the EUT axioms. I discuss economists' responses to this evidence. These vary from developing new theoretical models, models that nest EUT as a special case, such as Rank Dependent Utility (RDU) and Regret Theory, as well as models that do not nest EUT, such as Cumulative Prospect Theory, to critiques of experimental methods and scope, to the promotion of stochastic models of choice. I discuss popular stochastic choice models in depth and evaluate their normative coherence. I find that the "Random Preferences" stochastic model fails to make normatively coherent statements, in contrast to the "Random Error" and "Tremble" models, which do so. I demonstrate a method to calculate the unconditional likelihood of choice errors for populations of EUT-compliant and RDU-compliant agents, and show how certain characteristics of the population relate to the likelihood of these choice errors and their costliness in terms of forgone welfare. I find that elements of the stochastic model that are not related to preference relations tend to have a greater influence on unconditional welfare estimates than the preference parameters themselves. Finally, I conduct a power analysis of the ability of a lottery battery instrument to correctly classify experimental subjects as employing either EUT or RDU, and the effect of this classification on the accuracy of the estimates of welfare surplus for the subjects. For large ranges of parameter values for these models, I find that the probability of type I and type II errors in the classification process are not trivial, and can be very costly in terms of welfare surplus. Additionally, I show that for a hypothetical population comprising subjects employing EUT or RDU, we can arrive at more accurate welfare surplus estimates on average by assuming that every subject employs the RDU functional, rather than by first trying to differentiate RDU subjects from EUT subjects.
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    Studies in risk perception and financial literacy: applications using subjective belief elicitation
    (2019) Schneider, Mark; Ross, Donald; Harrison, Glenn W; Rutström, E Elisabet
    The concept of literacy has grown from “reading literacy” to now encompass many different domain-specific topics and skill sets, such as health literacy, financial literacy, and computer literacy. The way literacy is talked about, examined, measured, and communicated has also evolved. Literacy measures began as a simple metric of counting the number of individuals in a country that could read and dividing that count by the total population to compute the percentage of literate individuals. However, this approach ignores situations in which an illiterate person has access to a literate person that could read to them. This was the premise of research in development economics that introduced the measure of effective literacy, which accounts for potential positive externalities that could arise from access to a literate individual. This dissertation expands on the idea of effective literacy and introduces a concept of extended literacy, which applies to a decision-maker having access to an external scaffold during the decision-making process. The scaffolds considered include access to the internet, to an anonymous person as part of a group, and to a household member. The research presented here measures extended financial literacy under these various scaffolds. Financial literacy reflects an individual’s knowledge about financial matters, including the management of risks. The research assesses subjects’ knowledge about interest and inflation, budgeting, and longevity risk. The techniques used to measure literacy reflect state-of-the-art advances in subjective belief elicitation that allow for the recovery of each decisionmaker’s entire underlying subjective distribution. This method generates a rich characterization of subjects’ beliefs and allows the construction of various measures of literacy, welfare, bias, and confidence with respect to a known, true answer. Using controlled laboratory and artefactual field experiments with real rewards and incentivized elicitation of beliefs, we find that these scaffolds reliably enhance literacy. We relate the notion of extended literacy to concepts in economics, cognitive science and philosophy, such as effective literacy, embedded literacy and embodied literacy.