2024/11/27 by Ryan Oprea · 1 voice · 3 citations
Decision Sciences · #Decision-Making and Behavioral Economics #Complex Systems and Decision Making #Leadership, Behavior, and Decision-Making Studies
paper · doi:10.1257/aer.20221227
openalex publication_date 2024/11/27 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/16
We provide evidence that classic lottery anomalies like probability weighting and loss aversion are not special phenomena of risk. They also arise (and often with equal strength) when subjects evaluate deterministic, positive monetary payments that have been disaggregated to resemble lotteries. Thus, we find, e.g., apparent probability weighting in settings without probabilities and loss aversion in settings without scope for loss. Across subjects, anomalies in these deterministic tasks strongly predict the same anomalies in lotteries. These findings suggest that much of the behavior motivating our most important behavioral theories of risk derive from complexity-driven mistakes rather than true risk preferences. (JEL C91, D44, D81, D91)