Experiment

Household Bargaining in Egypt

The equal distribution of decision-making powers has been declared as a goal for development itself. Many crucial decisions that determine the future of a society are taken at the household level. We seek to elicit the willingness to implement revealed preferences within the household. A representative sample of 640~individuals residing in Cairo, Egypt, were confronted with the decision to donate from a joint income to the Egyptian Red Crescent. In a first step, subjects made donation decisions after being paired either with their spouses, or a randomly chosen participant from the same population.

Loss Aversion and Social Image Concerns

Higher order risk preferences

Higher order risk preferences play an important role in economics, most prominently in the theory of saving under uncertainty. Leland (1968) suggests that under uncertain income prudent individuals increase savings as a precautionary measure. To test this proposition we present a new experimental method to elicit higher order risk preferences. The method we propose uses a non-parametric estimation of the utility function using P-splines. Using this method we can compute well-known theoretically derived measures of the intensities of prudence and risk aversion.

Focusing effects and time discounting

Revision requested Review of Economic Studies Working paper Do people prefer concentrated utility? We present novel findings on intertemporal choice that cannot be explained by discounted utility, including hyperbolic discounting. In a series of lab experiments, we let subjects allocate money to earlier and later payoffs. We vary within-subject whether these payoffs are concentrated in a single period or dispersed over multiple periods. Our results show that intertemporal choice is affected by concentration bias: First, individuals allocate less money to later payoffs when these are dispersed than when they are concentrated.