Consistency and Refutability of Affective Choice

Anat Bracha

Yale School of Management Working Papers from Yale School of Management

Abstract: We consider a model of affective decision making in the state preference model of uncertainty, where we prove that affective choice is testable in insurance markets and complete financial markets. Moreover we extend these results to equilibrium models of mutual insurance and an interesting class of Knightian uncertainty models. These results imply the existence of axioms on observed choice behavior that characterize affective choice in these markets.

Keywords: Affective choice; perceived probabilities; decision making under uncertainty; insurance; testability; implicit axiomatization (search for similar items in EconPapers)
Date: 2004-10-01
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