Article2023

Improving Risky-Choice Predictions Using Response Times

8 citations0/0 files storedJournal of Political Economy Microeconomics

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Decision-Making and Behavioral Economics Economic and Environmental Valuation Experimental Behavioral Economics Studies

Abstract

Structural methods to estimate preferences for decisions under risk often perform poorly when predicting new decisions out of sample. We compare standard structural methods to a new nonparametric method that reveals preferences with the help of response times, and does so independently of any utility or (symmetric) noise specification. Using two datasets involving choices over risky prospects, we show that the new method outperforms standard (parametric) utility estimations in terms of predictive accuracy.

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References

1992Discrete Choice Theory of Product Differentiation 1977The structure of random utility models 1997An Experiment on Risk Taking and Evaluation Periods 2008Eliciting Risk and Time Preferences 1994Investigating Generalizations of Expected Utility Theory Using Experimental Data 2002Sex differences and statistical stereotyping in attitudes toward financial risk 2010Eliciting risk preferences: When is simple better?1951An Experimental Measurement of Utility

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