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on Cognitive and Behavioural Economics |
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Issue of 2025–07–14
three papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Ryota IWAMOTO; Takunori ISHIHARA; Takanori IDA |
| Abstract: | This study empirically investigates the differences in risk preferences and loss aversion between humans and generative AI. We conduct a nationwide online survey of 4, 838 individuals and generate AI responses under identical conditions by using personas constructed from demographic attributes. The results show that in gain domains, both humans and the AI select risk-averse options and exhibit similar preference patterns. However, in loss domains, AI shows a stronger risk-loving tendency and responds more sharply to individual attributes such as gender, age, and income. We retrain the AI by fine-tuning it based on human choice data. After fine-tuning, the AI’s preference distribution moves closer to that of humans, with loss-related decisions showing the greatest improvement. Using Wasserstein distance, we also confirm that fine-tuning reduces the behavioral gap between AI and humans. |
| Keywords: | bias, bias, loss aversion, risk preference, generative AI, persona, fine-tuning, Wasserstein distance |
| JEL: | D91 C91 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:kue:epaper:e-25-006 |
| By: | Riccardo Manghi (LUISS Guido Carli University); Daniela Di Cagno (LUISS Guido Carli University) |
| Abstract: | This study investigates individual differences in catastrophic risk perception using Cumulative Prospect Theory (CPT) through a laboratory experiment. The choice of CPT allows us to introduce a basic "addendum" to traditional EUT evaluations of these kinds of risks. We analyze the drivers of risk perception through a laboratory measure of CPT based on experimental data, where possible drivers include sociodemographic factors, psychological characteristics, and psychometric variables such as past experience. We define in this setting an interesting aspect that is a peculiar characteristic of extreme risks: the so-called shared burden effect, where individuals perceive the same risks as less severe if they affect a larger share of the collectivity. External validity is provided by examining whether laboratory-elicited risk perception predicts real-world extreme risk assessments. |
| Keywords: | risk perception, catastrophic risk, prospect theory, experimental economics, shared burden effect |
| JEL: | D81 C91 |
| Date: | 2025–06–23 |
| URL: | https://d.repec.org/n?u=RePEc:rtv:ceisrp:605 |
| By: | Daniele Caliari (Università di Napoli Federico II, CSEF and UCFS, Uppsala University); Valentino Dardanoni (Università di Palermo); Carla Guerriero (Università di Napoli Federico II and CSEF); Paola Manzini (School of Economics, University of Bristol); Marco Mariotti (School of Economics and Finance, Queen Mary University of London) |
| Abstract: | Choice mistakes may be consequential. While we have plentiful evidence on adult behaviour, childrenÕs choices are much less studied, yet not only may they shed light on adult behaviour, but they are themselves important, as potentially leading to low educational attainment, unhealthy food choices, and risky behaviours. In this paper, we study experimentally how childrenÕs choice consistency and ability to avoid mistakes change with age. We study choice by primary school children in two (ubiquitous) domains: riskless and risky choice. We elicit complete choice functions over deterministic choices, while for lotteries we introduce a novel experimental design, documenting as a particular type of framing effect, consistent with correlation neglect, so far only studied in adults. With plentiful evidence of choice errors in adults, unsurprisingly choice errors and inconsistencies abound in children - strikingly though, in some cases already by age 10-11 children display error rates which are close to those observed in adults. Our results are well captured by a model of limited, stochastic consideration. Our experiment is rich enough to highlight the shape that potential interventions could take, aiming at increasing childrenÕs consideration capacity. Different socioeconomic backgrounds seem to matter, though, reassuringly, the gap does tend to close over time. |
| Keywords: | correlation neglect, bounded rationality, violations of first order stochastic dominance. |
| JEL: | D01 D90 |
| Date: | 2024–11–15 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:737 |