Essays in behavioral economics

This thesis studies individual choice in both individualistic and interactive decisions, under different situations of risk, uncertainty and time delay. The first chapter of my dissertation investigates the tendency of human beings to make choices that are biased towards alternatives in the present. I characterize the general class of utilities which are consistent with present-biased behavior. I show that any present-biased preference has a subjective max-min representation, which can be cognitively interpreted as the decision maker considering the most conservative “present equivalents” in the face of subjective uncertainty about future tastes. The second chapter of my thesis provides desiderata of choice consistency that experimenters should employ while estimating time preferences from choice data. We also show how application of this desiderata can help us learn new insights from previous experimental studies. The third chapter of my thesis establishes a tight relation between non-standard behaviors in the domains of risk and time by considering a decision maker with non-expected utility preferences who believes that only present consumption is certain while any future consumption is uncertain. We provide the first complete characterization of the two-way relations between i) certainty effect and present bias, and, ii) common ratio effect and the common difference effect. A corollary to our results is that hyperbolic discounting implies the Common Ratio Effect and that quasi-hyperbolic discounting implies the Certainty Effect. In the fourth chapter of my thesis, I use variation in experimental design (time-discounting) and belief data from subjects to investigate the determinants of behavior in Finitely Repeated Prisoner's Dilemma games.Arts, Faculty ofVancouver School of EconomicsGraduat