Essays in revealed preference theory and behavioral economics

Time, risk, and attention are all integral to economic decision making. The aim of this work is to understand those key components of decision making using a variety of approaches: providing axiomatic characterizations to investigate time discounting, generating measures of visual attention to infer consumers' intentions, and examining data from unique field settings.

Chapter 2, co-authored with Federico Echenique and Kota Saito, presents the first revealed-preference characterizations of exponentially-discounted utility model and its generalizations. My characterizations provide non-parametric revealed-preference tests. I apply the tests to data from a recent experiment, and find that the axiomatization delivers new insights on a dataset that had been analyzed by traditional parametric methods.

Chapter 3, co-authored with Min Jeong Kang and Colin Camerer, investigates whether "pre-choice" measures of visual attention improve in prediction of consumers' purchase intentions. We measure participants' visual attention using eyetracking or mousetracking while they make hypothetical as well as real purchase decisions. I find that different patterns of visual attention are associated with hypothetical and real decisions. I then demonstrate that including information on visual attention improves prediction of purchase decisions when attention is measured with mousetracking.

Chapter 4 investigates individuals' attitudes towards risk in a high-stakes environment using data from a TV game show, Jeopardy!. I first quantify players' subjective beliefs about answering questions correctly. Using those beliefs in estimation, I find that the representative player is risk averse. I then find that trailing players tend to wager more than "folk" strategies that are known among the community of contestants and fans, and this tendency is related to their confidence. I also find gender differences: male players take more risk than female players, and even more so when they are competing against two other male players.

Chapter 5, co-authored with Colin Camerer, investigates the dynamics of the favorite-longshot bias (FLB) using data on horse race betting from an online exchange that allows bettors to trade "in-play." I find that probabilistic forecasts implied by market prices before start of the races are well-calibrated, but the degree of FLB increases significantly as the events approach toward the end.

Structural Design under Seismic Risk Using Multiple Performance Objectives

Structural design is a decision-making process in which a wide spectrum of requirements, expectations, and concerns needs to be properly addressed. Engineering design criteria are considered together with societal and client preferences, and most of these design objectives are affected by the uncertainties surrounding a design. Therefore, realistic design frameworks must be able to handle multiple performance objectives and incorporate uncertainties from numerous sources into the process.

In this study, a multi-criteria based design framework for structural design under seismic risk is explored. The emphasis is on reliability-based performance objectives and their interaction with economic objectives. The framework has analysis, evaluation, and revision stages. In the probabilistic response analysis, seismic loading uncertainties as well as modeling uncertainties are incorporated. For evaluation, two approaches are suggested: one based on preference aggregation and the other based on socio-economics. Both implementations of the general framework are illustrated with simple but informative design examples to explore the basic features of the framework.

The first approach uses concepts similar to those found in multi-criteria decision theory, and directly combines reliability-based objectives with others. This approach is implemented in a single-stage design procedure. In the socio-economics based approach, a two-stage design procedure is recommended in which societal preferences are treated through reliability-based engineering performance measures, but emphasis is also given to economic objectives because these are especially important to the structural designer's client. A rational net asset value formulation including losses from uncertain future earthquakes is used to assess the economic performance of a design. A recently developed assembly-based vulnerability analysis is incorporated into the loss estimation.

The presented performance-based design framework allows investigation of various design issues and their impact on a structural design. It is a flexible one that readily allows incorporation of new methods and concepts in seismic hazard specification, structural analysis, and loss estimation.