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  1. Axiom preferences and choice mistakes under risk
    Author: Herweg, Fabian; Hippel, Svenja; Müller, Daniel; Römeis, Fabio
    Published: July 2024
    Publisher:  ECONtribute, [Bonn]

    We investigate whether violations of canonical axioms of choice under risk are mistakes or a manifestation of true preferences. First, we elicit axiom and gamble preferences and then allow subjects to revise their potentially conflicting preferences.... more

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    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 711
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    We investigate whether violations of canonical axioms of choice under risk are mistakes or a manifestation of true preferences. First, we elicit axiom and gamble preferences and then allow subjects to revise their potentially conflicting preferences. Among the behavioral patterns that allow for a clear-cut interpretation on the decision level, we find that roughly 70% of axiom violations are intentional whereas only 30% are mistakes. On the subject level we can clearly categorize almost half of our subjects. Among those, roughly 24% are rational expected utility maximizers, 24% make occasional mistakes, and 52% refute the normative value of these axioms.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/301032
    Series: ECONtribute discussion paper ; no. 326
    Subjects: Axiomatic rationality; Choice under risk; Context-dependent preferences; Mistakes; Regret theory
    Scope: 1 Online-Ressource (circa 71 Seiten), Illustrationen
  2. Consumer mistakes and advertising
    the case of mortgage refinancing
    Author: Grundl, Serafin; Kim, You Suk
    Published: May 5, 2017
    Publisher:  Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C.

    Does advertising help consumers to find the products they need or push them to buy products they don't need? In this paper, we study the effects of advertising on consumer mistakes and quantify the resulting effect on consumer welfare in the market... more

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    Verlag (kostenfrei)

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    Helmut-Schmidt-Universität, Universität der Bundeswehr Hamburg, Universitätsbibliothek
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    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Inter-library loan:
    No inter-library loan

     

    Does advertising help consumers to find the products they need or push them to buy products they don't need? In this paper, we study the effects of advertising on consumer mistakes and quantify the resulting effect on consumer welfare in the market for mortgage refinancing. Mortgage borrowers frequently make costly refinancing mistakes by either refinancing when they should wait, or by waiting when they should refinance. We assemble a novel data set that combines a borrower's exposure to direct mail refinance advertising and their subsequent refinancing decisions. Even though on average borrowers would lose approximately $500 by refinancing, the average monthly exposure of 0.23 refinancing advertisements reduces the expected net present value of mortgage payments on average by $13, because borrowers who should refinance are targeted by advertisers and more responsive to advertising. A counterfactual advertising policy that redirects all advertising to borrowers who should refinance would increase the gain in borrower welfare to $45

     
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    Content information
    Volltext (kostenfrei)
    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Series: Finance and economics discussion series ; 2017, 067
    FEDS Working Paper ; No. 2017-067
    Subjects: Advertising; Mistakes; Mortgage; Refinancing
    Scope: 1 Online-Ressource (circa 53 Seiten)