Explaining heterogeneity in utility functions by individual differences in decision modes

The curvature of utility functions varies between people. We suggest that there is a relationship between individual differences in preferred decision mode (intuition vs. deliberation) and the curvature of the individual utility function. If a person habitually prefers a deliberative mode, the utility function should be nearly linear, while it should be curved when a person prefers the intuitive mode. In this study the utility functions of the subjects were assessed using a lottery-based elicitation method and related to a measurement of the habitual mode preference for intuition and deliberation. Results confirm that people who prefer the deliberative mode have a utility function that is more linear than for people who prefer the intuitive mode. Our findings indicate a stronger affective bias of subjective values in intuitive than deliberate decision makers. While deliberative decision makers may have rather used the stated values, intuitive decision makers may have additionally integrated affective reactions towards the stimuli into the decision.

Search behaviour with reference point preferences:

People are heterogeneous with respect to their behaviour in sequential decision situations. This paper develops models for search behaviour under the assumption of expected-utility maximisation and a new search model that assumes sequential updating of utility reference points during the search process. I find experimental evidence that supports the new reference point model: Individual loss aversion is systematically related to the observed search behaviour in a way that is consistent with the predictions of the reference point model. Risk attitude is not related to search behaviour. The finding that many people set reference points in sequential decision tasks is of interest in, e.g. consumer economics, labour economics, finance, and decision theory.

The German SAVE Survey: Documentation and Methodology

The purpose of this document is to describe methodological details of the German SAVE survey and to provide users of SAVE with all necessary information for working with the publicly available SAVE dataset.

The German SAVE survey: documentation and methodology

The purpose of this document is to describe methodological details of the German SAVE survey and to provide users of SAVE with all necessary information for working with the publicly available SAVE dataset.

Modeling the Use of Nonrenewable Resources Using a Genetic Algorithm

This paper shows, how a genetic algorithm (GA) can be used to model an economic process: the interaction of profit-maximizing oil-exploration firms that compete with each other for a limited amount of oil. After a brief introduction to the concept of multi-agent-modeling in economics, a GA-based resource-economic model is developed. Several model runs based on different economic policy assumptions are presented and discussed in order to show how the GA-model can be used to gain insight into the dynamic properties of economic systems. The remainder outlines deficiencies of GA-based multi-agent approaches and sketches how the present model can be improved.

The Relationship Between Risk Attitudes and Heuristics in Search Tasks: A Laboratory Experiment

Experimental studies of search behavior suggest that individuals stop searching earlier than predicted by the optimal, risk-neutral stopping rule. Such behavior could be generated by two different classes of decision rules: rules that are optimal conditional on utility functions departing from risk neutrality, or heuristics derived from limited cognitive processing capacities and satisfycing. To discriminate among these two possibilities, we conduct an experiment that consists of a standard search task as well as a lottery task designed to elicit utility functions. We find that search heuristics are not related to measures of risk aversion, but to measures of loss aversion

The flow of plasma in the solar terrestrial environment

The overall goal of our NASA Theory Program is to study the coupling, time delays, and feedback mechanisms between the various regions of the solar-terrestrial system in a self-consistent, quantitative manner. To accomplish this goal, it will eventually be necessary to have time-dependent macroscopic models of the different regions of the solar-terrestrial system and we are continually working toward this goal. However, our immediate emphasis is on the near-earth plasma environment, including the ionosphere, the plasmasphere, and the polar wind. In this area, we have developed unique global models that allow us to study the coupling between the different regions. Another important aspect of our NASA Theory Program concerns the effect that localized structure has on the macroscopic flow in the ionosphere, plasmasphere, thermosphere, and polar wind. The localized structure can be created by structured magnetospheric inputs (i.e., structured plasma convection, particle precipitation or Birkeland current patterns) or time variations in these inputs due to storms and substorms. Also, some of the plasma flows that we predict with our macroscopic models may be unstable, and another one of our goals is to examine the stability of our predicted flows. Because time-dependent, three-dimensional numerical models of the solar-terrestrial environment generally require extensive computer resources, they are usually based on relatively simple mathematical formulations (i.e., simple MHD or hydrodynamic formulation). Therefore, another long-range goal of our NASA Theory Program is to study the conditions under which various mathematical formulations can be applied to specific solar-terrestrial regions. This may involve a detailed comparison of kinetic, semikinetic, and hydrodynamic predictions for a given polar wind scenario or it may involve the comparison of a small-scale particle-in-cell (PIC) simulation of a plasma expansion event with a similar macroscopic expansion event. The different mathematical formulations have different strengths and weaknesses and a careful comparison of model predictions for similar geophysical situations will provide insight into when the various models can be used with confidence

The flow of plasma in the solar terrestrial environment

The overall goal of our NASA Theory Program is to study the coupling, time delays, and feedback mechanisms between the various regions of the solar-terrestrial system in a self-consistent, quantitative, manner. To accomplish this goal, it will eventually be necessary to have time-dependent macroscopic models of the different regions of the solar-terrestrial system and we are continually working toward this goal. However, our immediate emphasis is on the near-earth plasma environment, including the ionosphere, the plasmasphere, and the polar wind. In this area, we have developed unique global models that allow us to study the coupling between the different regions. These results are highlighted. Another important aspect of our NASA Theory Program concerns the effect that localized structure has on the macroscopic flow in the ionosphere, plasmasphere, thermosphere and polar wind. The localized structure can be created by structured magnetospheric inputs (i.e., structured plasma convection, particle precipitation or Birkeland current patterns) or time variations in these inputs due to storms and substorms. Also, some of the plasma flows that we predict with our macroscopic models may be unstable. Another one of our goals is to examine the stability of our predicted flows. Because time-dependent three-dimensional numerical models of the solar-terrestrial environment generally require extensive computer resources, they are usually based on relatively simple mathematical formulations (i.e., simple MHD or hydrodynamic formulations). Therefore, another long-range goal of our NASA Theory Program is to study the conditions under which various mathematical formulations can be applied to specific solar-terrestrial regions. This may involve a detailed comparison of kinetic, semikinetic, and hydrodynamic predictions for a given polar wind scenario or it may involve the comparison of a small-scale particle-in-cell (PIC) simulation of a plasma expansion event with a similar macroscopic expansion event. The different mathematical formulations have different strengths and weaknesses and a careful comparison of model predictions for similar geophysical situations will provide insight into when the various models can be used with confidence

What is an Adequate Standard of Living During Retirement?

Many economists and policy-makers argue that households do not save enough to maintain an adequate standard of living during retirement. However, there is no consensus on the answer to the underlying question what this standard should be, despite the fact that it is crucial for the design of saving incentives and pension reforms. We address this question with a survey, individually tailored to each respondent’s financial situation, conducted both in the U.S. and the Netherlands. Key findings are that adequate levels of retirement spending exceed 70 percent of working life spending, and minimum acceptable replacement rates depend strongly on income.Life cycle preferences;pension reform;replacement rates;retirement saving

The Role of Childhood Health for the Intergenerational Transmission of Human Capital: Evidence from Administrative Data

We use unique administrative German data to examine the role of childhood health for the intergenerational transmission of human capital. Specifically, we examine the extent to which a comprehensive list of health conditions – diagnosed by government physicians – can account for developmental gaps between the children of college educated parents and those of less educated parents. In total, health conditions explain 18% of the gap in cognitive ability and 65% of that in language ability, based on estimations with sibling fixed effects. Thus, policies aimed at reducing disparities in child achievement should also focus on improving the health of disadvantaged children.health inequality, human capital formation, childhood health, intergenerational mobility