Affective Decision Making: A Behavioral Theory of Choice

Anat Bracha and Donald J. Brown ()
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Donald J. Brown: Dept. of Economics, Yale University, https://economics.yale.edu/people/emeritus/donald-j-brown

No 1633, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Affective decision-making (ADM) is a refutable and predictive theory of individual choice under risk and uncertainty. It generalizes expected utility theory by positing the existence of two cognitive processes -- the "rational" and the "emotional" process. Observed choice is the result of their simultaneous interaction. We present a model of affective choice in insurance markets, where risk perceptions are endogenous.

Keywords: Affective choice; Endogenous risk perception; Expected utility theory; Insurance (search for similar items in EconPapers)
JEL-codes: D01 D81 G22 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007-11
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Affective Decision Making: A Behavioral Theory of Choice (2009)
Working Paper: Affective Decision Making: a Behavioral Theory of Choice (2007)
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