Working papers Preferences for One-Shot Resolution of Uncertainty and Allais-Type Behavior September , 2009 Abstract: Experimental evidence suggests that individuals are more risk averse when they perceive risk gradually. We address these findings by studying a decision maker (DM) who has recursive preferences over compound lotteries and who cares about the way uncertainty is resolved over time. DM has preferences for one-shot resolution of uncertainty (PORU) if he always prefers any compound lottery to be resolved in a single stage. We establish an equivalence between dynamic PORU and static preferences that are identified with the behavior observed in Allais-type experiments. The implications of this equivalence on preferences over information systems are examined. We define the gradual resolution premium and demonstrate its magnifying effect when combined with the usual risk premium. In an intertemporal context, PORU captures "loss aversion with narrow framing". JEL Classifications: D80, D81 ________________________________________________ Ashamed to be Selfish (with Philipp Sadowski) September , 2009 Abstract: We study a decision maker (DM) who has preferences over sets of payoff-allocations between herself and a passive recipient, which represent second-stage choice-problems. The recipient is only aware of second-stage choice of an allocation. Not choosing the fairest available allocation in the second stage inflicts shame on DM. We derive a representation that identifies DM's private ranking of allocations, her norm of fairness and shame. The norm of fairness can be further characterized as the Nash solution of a bargaining game induced by the second-stage choice problem. JEL Classifications: C78, D63, D64, D78, D80, D81 ________________________________________________________ Don't Tell Me Anything Until You Know For Sure (with Shiri Artstein-Avidan) October 2006 Abstract: We show that for a disappointment averse decision maker, splitting a lottery into several stages reduces its value. To do this, we extend Gul's model of disappointment aversion into a dynamic setting while keeping its basic characteristics intact. The result depends solely on the sign of the coefficient of disappointment aversion. Keywords: Disappointment Aversion, Two-Stage lotteries.
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