Affective decision making: A theory of optimism bias

Anat Bracha and Donald J. Brown

Games and Economic Behavior, 2012, vol. 75, issue 1, 67-80

Abstract: Optimism bias is inconsistent with the independence of decision weights and payoffs found in models of choice under risk and uncertainty, such as expected utility theory, subjective expected utility, and prospect theory. We therefore propose an alternative model of risky and uncertain choice where decision weights—affective or perceived risk—are endogenous.

Keywords: Affective expected utility; Optimism bias; Demand for insurance (search for similar items in EconPapers)
JEL-codes: D01 D81 G22 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825611001825
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Affective Decision-Making: A Theory of Optimism-Bias (2010)
Working Paper: Affective Decision-Making: A Theory of Optimism-Bias (2010)
Working Paper: Affective decision making: a theory of optimism bias (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:75:y:2012:i:1:p:67-80

DOI: 10.1016/j.geb.2011.11.004

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().