Olivier l'Haridon

Experienced vs. Described Uncertainty: Do We Need Two Prospect Theory Specifications?

This paper reports on the results of an experimental elicitation at the individual level of all prospect theory components (i.e., utility, loss aversion, and weighting functions) in two decision contexts: situations where alternatives are described as probability distributions and situations where the decision maker must experience unknown probability distributions through sampling before choice. For description-based decisions, our results are fully consistent with prospect theorys empirical findings under risk. Furthermore, no significant differences are detected across contexts as regards utility and loss aversion. Whereas decision weights exhibit similar qualitative properties across contexts typically found under prospect theory, our data suggest that, for gains at least, the subjective treatment of uncertainty in experience-based and description-based decisions is significantly different. More specifically, we observe a less pronounced overweighting of small probabilities and a more pronounced underweighting of moderate and high probabilities for experience-based decisions. On the contrary, for losses, no significant differences were observed in the evaluation of prospects across contexts. n nThis paper was accepted by George Wu, decision analysis.

Employment protection reform in search economies

The design of employment protection legislation (EPL) is of particular importance in the European debate on the contours of labor market reform. In this article we appeal to an equilibrium unemployment model to investigate the virtues of EPL reform which reduces the red tape and legal costs associated with layo s and introduces a U.S.-style experiencerating system, which we model as a combination of a layo tax and a payroll subsidy. The reform considered shows that it is possible to improve the e ciency of employment protection policies without a ecting the extent of worker protection on the labor market. These results are consistent with the conventional wisdom that experience rating is desirable, not only as an integral component of unemployment-compensation nance, as most studies acknowledge, but also as part and parcel of a virtuous EPL system.

Fee-for-service payments and consultation length in general practice: a work--leisure trade-off model for French GPs

This article presents an adaptation of the labour supply model applied to the independent medical sector. First, we model simultaneous General Practitioner (GP) decisions on both the leisure time and the consultation length for two payment schemes: fixed fees and unregulated fees. The objective of this econometric study is to validate the theoretical prediction that doctors under unregulated fees may make choices about the length of patient consultations independent of their personal leisure decision. Indeed, according to our empirical results, the bidirectional link between leisure choice and consultation length – verified with fixed fees – does not hold any longer under unregulated fees. Our findings can be seen as a necessary but not a sufficient condition to legitimize unregulated fees in general practice.

Réforme de la protection de l'emploi et performance du marché du travail dans un modèle d'appariement

In this article, we evaluate the virtues of an employment protection reform which is based on a simplification of the red tape and legal costs associated with layoffs and on the introduction of a U.S.-style experience-rating system. To this end, we use a search and matching model a la Mortensen and Pissarides to show that such a reform improves both the design of employment protection and the performance of the labor market.

Aversion aux pertes: origine, composantes et implications marketing

Laversion aux pertes signifie que les changements négatifs ont plus dimpact psychologique que les changements positifs. Lobjectif de notre article est de faire un état des lieux des travaux de recherche consacrés à cette notion dans le domaine du marketing et de proposer des pistes de recherche pour le développement futur de cette notion. Nous présentons le concept daversion aux pertes et plusieurs explications de ce phénomène. Trois groupes de facteurs qui affectent le niveau daversion aux pertes sont identifiés, à savoir: les caractéristiques socio-démographiques du décideur, les caractéristiques du produit et les facteurs liés aux conditions de transaction. Plusieurs recommandations stratégiques qui tiennent compte de laversion aux pertes des consommateurs sont formulées.

Loss Aversion: Origin, Components and Marketing Implications

Loss aversion accounts for negative changes having a higher psychological impact than positive changes. Our paper reviews existing marketing literature on loss aversion and suggests directions for future research. We distinguish four dimensions of loss aversion — neural, cognitive, affective and conative — and identify socio-demographic characteristics, product characteristics and exchange conditions as three main groups of loss aversion moderators. We formulate strategic recommendations for marketers based on consumer loss aversion.

Ambiguity preferences for health

Abstract In most medical decisions, probabilities are ambiguous and not objectively known. Empirical evidence suggests that peoples preferences are affected by ambiguity. Health economic analyses generally ignore ambiguity preferences and assume that they are the same as preferences under risk. We show how health preferences can be measured under ambiguity, and we compare them with health preferences under risk. We assume a general ambiguity model that includes many of the ambiguity models that have been proposed in the literature. For health gains, ambiguity preferences and risk preferences were indeed the same. For health losses, they differed with subjects being more pessimistic in decision under ambiguity. Utility and loss aversion were the same for risk and ambiguity. Our results imply that reducing the clinical ambiguity of health losses has more impact than reducing the ambiguity of health gains, that utilities elicited with known probabilities may not carry over to an ambiguous setting, and that ambiguity aversion may impact value of information analyses if losses are involved. These findings are highly relevant for medical decision making, because most medical interventions involve losses.

The Risk Attitudes of Professional Athletes: Optimism and Success are Related

This article studies whether measured risk attitudes and athletic success are related. We measured the risk preferences of the players of the Dutch men’s field hockey team, the reigning European champions, and runners-up in the 2012 Olympics and in the 2014 World Championships, and compared those with a matched sample of recreational hockey players. We had the rare opportunity to interview each professional individually. Our measurements were based on prospect theory. We disentangled the various components of risk attitudes using a parameter-free method that makes it possible to completely observe prospect theory without imposing simplifying assumptions and that captures individual heterogeneity. The professionals were more optimistic for gains than the nonprofessionals: they overweighted the probability of winning compared with the nonprofessional group. Utility curvature (diminishing sensitivity) and loss aversion were very close in the 2 groups. As probabilities were given, the difference in optimism was not caused by inaccurate beliefs. It was also unrelated to differences in overconfidence or in venturesomeness and impulsivity, 2 psychological traits associated with risk taking. Our findings indicate that success in sports may be related to differences in optimism. They are consistent with previous findings that optimistic people are more successful and that optimism may be associated with better outcomes.