Job Market Talk: "Connecting Common Ratio and Common Consequence Preferences," Jason Somerville, Federal Reserve Bank of New York
Speaker
Jason Somerville, Federal Reserve Bank of New York
Biography
Jason Somerville is an economist at the Federal Reserve Bank of New York. His research focuses on conducting laboratory experiments to test economic models and better understand the factors that shape individuals' decisions.
Event Details
Abstract: Common ratio (CR) and common consequence (CC) problems present two foundational deviations from expected utility (EU) but have been studied independently, with little exploration of experimental parameters, and using paired choice tasks that can yield biased inference. We overcome these limitations using valuations and a wide range of parameters to study connected problems, which also capture mixture preferences (MX). We empirically characterize combinations of CRCC-MX preferences throughout the parameter space, documenting systematic sensitivities and substantial heterogeneity inconsistent with leading non-EU models. We speculate on a model of “upside potential” that explains the modal pattern and captures additional data features.
