Simplicity and Probability Weighting in Choice under Risk
Year: 2022
Type: article
Abstract: We present a speculative application of model estimates from Fudenberg and Puri (2021) to prize-linked savings in South Africa. The models used include one combining simplicity theory (Puri 2018, 2022), a preference for lotteries with fewer possible outcomes, with cumulative prospect theory. The results and those of prior literature indicate that both simplicity and probability weighting have a role to play in understanding behavior in choice under risk. We discuss the properties of these models and their implications for behavior.
Source: AEA Papers and Proceedings
Authors: Drew Fudenberg, Indira Puri
Institution: Massachusetts Institute of Technology
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4281679485