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Additional deliberation reduces pessimism: evidence from the double-response method

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  • Katarzyna Gawryluk

    (The Robert Zajonc Institute for Social Studies, University of Warsaw)

  • Michal Krawczyk

    (University of Warsaw)

Abstract

We conduct a laboratory experiment to investigate the impact of deliberation time on behavior under risk and uncertainty. Towards this end we ask our participant to make quick, intuitive evaluations of a number of lotteries and report resulting certainty equivalents. Yet, we invite them to modify these initial decisions, whenever they find, after (additional) deliberation, that they do not precisely represent their preference. Both certainty equivalents are incentivized (a double-response method). The choice of evaluated lotteries allows us to semi-parametrically estimate the value function and the probability weighting function within the paradigm of the cumulative prospect theory. The main finding is that deliberation raises the probability weighting function (reduces pessimism), especially in the case of lotteries involving unknown probabilities.

Suggested Citation

  • Katarzyna Gawryluk & Michal Krawczyk, 2019. "Additional deliberation reduces pessimism: evidence from the double-response method," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 5(1), pages 51-64, August.
    • Handle: RePEc:spr:jesaex:v:5:y:2019:i:1:d:10.1007_s40881-019-00070-4
    DOI: 10.1007/s40881-019-00070-4
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    Cited by:

    1. David J. Cooper & Ian Krajbich & Charles N. Noussair, 2019. "Choice-Process Data in Experimental Economics," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 5(1), pages 1-13, August.

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    More about this item

    Keywords

    Probability weighting; Prospect theory; Time pressure; Double-response method;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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