Health Information and the Choice of Fish Species: An Experiment Measuring the Impact of Risk and Benefit Information, April 2006

An experiment was conducted in France to evaluate the impact of health information on consumers’ choice between two different types of fish. Successive messages revealing risks (methylmercury) and benefits (omega-3s) of consuming the fish, along with consumption recommendations, were delivered. Results show a significant difference of reaction according to the order and type of information. The information about risks had a larger marginal impact on change in willingness to pay (WTP) than did the information about benefits. While the results show that detailed messages on risks/benefits, including recommendations for nutrition behavior, matter in the modification of WTP, 40% of respondents did not change their initial choices after the revelation of health information.

Organizational Choice and Environmental Change

We explain the choice between franchising and vertical integration by estimating a model of relative performance in a sample of 250 Spanish car distributors, controlling for self-selection and including environmental factors. The method allows us to estimate performance counterfactuals. Organizational choice seemingly aims to contain moral hazard for both distributors and manufacturers but it is subject to start-up constraints and switching costs. While the market for franchises remained underdeveloped, information asymmetries led to the opening of integrated outlets. Their subsequent conversion into franchised outlets probably involved prohibitive transaction costs. Consequently, they performed worse than would have been expected had they been independent, as confirmed by the systematic improvement observed when they were in fact converted. The timing of such conversions suggests that switching costs were prohibitive until firms developed a substantial cushion of temporary contracts, previously forbidden by regulation.

Salience theory of choice under risk

We present a theory of choice among lotteries in which the decision maker's attention is drawn to (precisely defined) salient payoffs. This leads the decision maker to a context-dependent representation of lotteries in which true probabilities are replaced by decision weights distorted in favor of salient payoffs. By endogenizing decision weights as a function of payoffs, our model provides a novel and unified account of many empirical phenomena, including frequent risk-seeking behavior, invariance failures such as the Allais paradox, and preference reversals. It also yields new predictions, including some that distinguish it from Prospect Theory, which we test.

Effect of an ectoparasite on lay date, nest-site choice, desertion, and hatching success in the great tit (Parus major)

Ectoparasites are common in most bird species, but experimental evidence of their effects on life-history traits is scarce. We investigated experimentally the effects of the hematophagous hen flea (Ceratophyllus gallinae) on timing of reproduction, nest-site choice, nest desertion, clutch size, and hatching success in the great tit (Parus major). When great tits were offered a choice on their territory between an infested and a parasite-free nest-box, they chose the one without parasites. When there was no choice, the great tits in a territory containing an infested nest-box delayed laying the clutch by 11 days as compared with the birds that were offered a parasite-free nesting opportunity. The finding that there was no difference in phenotypic traits related to dominance between the birds nesting in infested boxes and birds nesting in parasite-free boxes suggests that the delay is not imposed by social dominance. Nest desertion between laying and shortly after hatching was significandy higher in infested nests. There was no difference between infested and parasite-free nests in clutch size, but hatching success and hence brood size at hatching were significantly smaller in infested nests. Nest-box studies of great tits have been seminal in the development of evolutionary, ecological, and behavioral theory, but recently a polemic has arisen in the literature about the validity of the conclusions drawn from nest-box studies where the naturally occurring, detrimental ectoparasites are eliminated by the routine removal of old nests between breeding seasons. Our study suggests that this criticism is valid and that the evaluation of the effects of ectoparasites may improve our understanding of behavioral traits, life-history traits, or population dynamics

L'enseignement du patient diabétique et son évaluation par un questionnaire à choix multiple. [Education of the diabetic patient and its evaluation by a multiple-choice questionnaire].

37 insulin-dependent and non-insulin-dependent diabetics answered a multiple-choice questionnaire during inpatient educational sessions. 12 dietetic and 12 pathophysiologic questions had to be answered. Statistical analysis of factors influencing the number of errors can be summed up as follows: there is a direct correlation between age of the patient and number of errors; the older the patient, the greater the number of errors. However, insulin-dependent diabetics committed fewer errors than non-insulin-dependent subjects of the same age, which suggests greater motivation in the first group due to their treatment. The test likewise affords the patients an opportunity of reviewing unclear topics and enables the educational team to adapt their teaching to the patients.

Portfolio choice and the effects of liquidity

This paper shows how to introduce liquidity into the well known mean-variance framework of portfolio selection. Either by estimating mean-variance liquidity constrained frontiers or directly estimating optimal portfolios for alternative levels of risk aversion and preference for liquidity, we obtain strong effects of liquidity on optimal portfolio selection. In particular, portfolio performance, measured by the Sharpe ratio relative to the tangency portfolio, varies significantly with liquidity. Moreover, although mean-variance performance becomes clearly worse, the levels of liquidity onoptimal portfolios obtained when there is a positive preference for liquidity are much lower than on those optimal portfolios where investors show no sign of preference for liquidity.

Welfare of naive and sophisticated players in school choice

Two main school choice mechanisms have attracted the attention in the literature: Boston and deferred acceptance (DA). The question arises on the ex-ante welfareimplications when the game is played by participants that vary in terms of their strategicsophistication. Abdulkadiroglu, Che and Yasuda (2011) have shown that the chances ofnaive participants getting into a good school are higher under the Boston mechanism thanunder DA, and some naive participants are actually better off. In this note we show thatthese results can be extended to show that, under the veil of ignorance, i.e. students not yetknowing their utility values, all naive students may prefer to adopt the Boston mechanism.

The role of awareness, information gathering and processing in school choice

This paper studies the determinants of school choice, focusing on the role of information. Weconsider how parents' search efforts and their capacity to process information (i.e., tocorrectly assess schools) affect the quality of the schools they choose for their children. Usinga novel dataset, we are able to identify parents' awareness of schools in their neighborhoodand measure their capacity to rank the quality of the school with respect to the officialrankings. We find that parents education and wealth are important factors in determiningtheir level of school awareness and information gathering. Moreover, these search effortshave important consequences in terms of the quality of school choice.

Choice by sequential procedures

We propose a rule of decision-making, the sequential procedure guided byroutes, and show that three influential boundedly rational choice models can be equivalentlyunderstood as special cases of this rule. In addition, the sequential procedure guidedby routes is instrumental in showing that the three models are intimately related. We showthat choice with a status-quo bias is a refinement of rationalizability by game trees, which, inturn, is also a refinement of sequential rationalizability. Thus, we provide a sharp taxonomyof these choice models, and show that they all can be understood as choice by sequentialprocedures.

A new compact linear programming formulation for choice network revenue management

The choice network revenue management model incorporates customer purchase behavioras a function of the offered products, and is the appropriate model for airline and hotel networkrevenue management, dynamic sales of bundles, and dynamic assortment optimization.The optimization problem is a stochastic dynamic program and is intractable. A certainty-equivalencerelaxation of the dynamic program, called the choice deterministic linear program(CDLP) is usually used to generate dyamic controls. Recently, a compact linear programmingformulation of this linear program was given for the multi-segment multinomial-logit (MNL)model of customer choice with non-overlapping consideration sets. Our objective is to obtaina tighter bound than this formulation while retaining the appealing properties of a compactlinear programming representation. To this end, it is natural to consider the affine relaxationof the dynamic program. We first show that the affine relaxation is NP-complete even for asingle-segment MNL model. Nevertheless, by analyzing the affine relaxation we derive a newcompact linear program that approximates the dynamic programming value function betterthan CDLP, provably between the CDLP value and the affine relaxation, and often comingclose to the latter in our numerical experiments. When the segment consideration sets overlap,we show that some strong equalities called product cuts developed for the CDLP remain validfor our new formulation. Finally we perform extensive numerical comparisons on the variousbounds to evaluate their performance.

Discrete devaluations and multiple equilibria in a first generation model of currency crises

The first generation models of currency crises have often been criticized because they predict that, in the absence of very large triggering shocks, currency attacks should be predictable and lead to small devaluations. This paper shows that these features of first generation models are not robust to the inclusion of private information. In particular, this paper analyzes a generalization of the Krugman-Flood-Garber (KFG) model, which relaxes the assumption that all consumers are perfectly informed about the level of fundamentals. In this environment, the KFG equilibrium of zero devaluation is only one of many possible equilibria. In all the other equilibria, the lack of perfect information delays the attack on the currency past the point at which the shadow exchange rate equals the peg, giving rise to unpredictable and discrete devaluations.

Simple models for multi-attribute choice with many alternatives: When it does and does not pay to face tradeoffs with binary attributes

Working Paper no longer available. Please contact the author.

Choice of partners in multiple two-person prisoner's dilemma games: An experimental study

We examine the effect of unilateral and mutual partner selection in the context of prisoner's dilemmas experimentally. Subjects play simultaneously several finitely repeated two-person prisoner's dilemma games. We find that unilateral choice is the best system. It leads to low defection and fewer singles than with mutual choice. Furthermore, with the unilateral choice setup we are able to show that intendingdefectors are more likely to try to avoid a match than intending cooperators. We compare our results of multiple games with single game PD-experiments and find no difference in aggregate behavior. Hence the multiple game technique is robust and might therefore be an important tool in the future for testing the use of mixed strategies.