Who Is (More) Rational

By Syngjoo Choi, Shachar Kariv, Wieland Mueller, Dan Silverman. 2014

323 citations recorded by the source corpus.

Revealed preference theory o¤ers a criterion for decision-making quality: if decisions are high quality then there exists a utility function that the choices maximize. We conduct a large-scale ?eld experiment that enables us to test subjects?choices for consistency with utility maximization and to combine the experimental data with a wide range of individual socioeco-nomic information for the subjects. There is considerable heterogeneity in subjects?consistency scores: high-income and high-education subjects display greater levels of consistency than low- income and low-education subjects, men are more consistent than women, and young subjects are more consistent than older subjects. We also ?nd that consistency with utility maximization is strongly related to wealth: a standard deviation increase in the consistency score is associated with 15-19 percent more wealth. This result conditions on socioeconomic variables including current income, education, and family structure, and is little changed when we add controls for past income, risk tolerance and the results of a standard personality test used by psychologists.

Subfields: Economics and Econometrics, General Decision Sciences, Safety Research

View Paper: https://www.semanticscholar.org/paper/3af3935857b98c32c7cf75e97b0a984cb6a9daeb

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Citations in the corpus

The psychometric and empirical properties of measures of risk preferences (2017, unknown): “Also, though previous work (e.g., Choi et al. 2014; Dave et al. 2010; von Gaudecker et al. 2011) has shown the consistency or variance of decision-making under uncertainty is related to socio-economic characteristics, we do not model mt as dependent on covariates, as this would add a significant…”
Risk aversion relates to cognitive ability: Preferences or Noise? (2016, result): “Older subjects display more noisy behavior and the highly educated exhibit less noisy behavior.22 Similar results have been reported by von Gaudecker, van Soest and Wengström (2011) in a study of risk preferences, and by Choi et al. (2014) in a study of optimal consumer choice.”
IQ, Expectations, and Choice (2019, unknown): “Coibion et al. (2019) study how different forms of monetary-policy communications causally change individuals’ inflation expectations.”
The Impact of Violence on Individual Risk Preferences: Evidence from a Natural Experiment (2015, background): “One plausible interpretation of the observed choice patterns is that respondents have monotonic preferences that they implement with error (Hey & Orme, 1994; Loomes, 2005; Von Gaudecker, van Soest, & Wengström, 2011; Choi et al., 2014).”
Revising Commitments: Field Evidence on the Adjustment of Prior Choices (2012, background): “If implementation errors are independent of each other, then measuring the tendency for static preference reversals from the non-implemented choices will break the mechanical relationship between reversals and time-inconsistency in the experiment.(22)”