IDEAS home Printed from https://ideas.repec.org/h/eme/rexezz/s0193-2306(08)00004-5.html
   My bibliography  Save this book chapter

Stochastic models for binary discrete choice under risk: a critical primer and econometric comparison

In: Risk Aversion in Experiments

Author

Listed:
  • Nathaniel T. Wilcox

Abstract

Choice under risk has a large stochastic (unpredictable) component. This chapter examines five stochastic models for binary discrete choice under risk and how they combine with “structural” theories of choice under risk. Stochastic models are substantive theoretical hypotheses that are frequently testable in and of themselves, and also identifying restrictions for hypothesis tests, estimation and prediction. Econometric comparisons suggest that for the purpose of prediction (as opposed to explanation), choices of stochastic models may be far more consequential than choices of structures such as expected utility or rank-dependent utility.

Suggested Citation

  • Nathaniel T. Wilcox, 2008. "Stochastic models for binary discrete choice under risk: a critical primer and econometric comparison," Research in Experimental Economics, in: Risk Aversion in Experiments, pages 197-292, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rexezz:s0193-2306(08)00004-5
    DOI: 10.1016/S0193-2306(08)00004-5
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1016/S0193-2306(08)00004-5/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1016/S0193-2306(08)00004-5/full/epub?utm_source=repec&utm_medium=feed&utm_campaign=repec&title=10.1016/S0193-2306(08)00004-5
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1016/S0193-2306(08)00004-5/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1016/S0193-2306(08)00004-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nathaniel T. Wilcox, 2024. "Conditional independence in a binary choice experiment," Journal of Risk and Uncertainty, Springer, vol. 68(3), pages 205-225, June.
    2. Holden, Stein T. & Tilahun, Mesfin, 2023. "Numeracy Skills, Decision Errors, and Risk Preference Estimation," CLTS Working Papers 5/23, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    3. Levon Barseghyan & Francesca Molinari, 2023. "Risk Preference Types, Limited Consideration, and Welfare," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 41(4), pages 1011-1029, October.
    4. Bernheim, B. Douglas & Sprenger, Charles, 2023. "On the empirical validity of cumulative prospect theory: A response to the Wakker commentaries," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    5. Villacis, Alexis H., 2023. "Inconsistent choices over prospect theory lottery games: Evidence from field experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 103(C).
    6. Yves Breitmoser & Lian Xue & Jiwei Zheng & Daniel John Zizzo, 2023. "Organizational Design and Error Propagation: Theory and Experiment," Discussion Papers Series 666, School of Economics, University of Queensland, Australia.
    7. Schrieks, Teun & Botzen, W.J. Wouter & Haer, Toon & Aerts, Jeroen C.J.H., 2024. "Drought risk attitudes in pastoral and agro-pastoral communities in Kenya," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).
    8. Stein T. Holden & Mesfin Tilahun, 2024. "Can Climate Shocks Make Vulnerable Subjects More Willing to Take Risks?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(4), pages 967-1007, April.
    9. Pavlo R. Blavatskyy, 2024. "Harmonic choice model," Theory and Decision, Springer, vol. 96(1), pages 49-69, February.
    10. Holden, Stein T. & Tilahun, Mesfin, 2022. "Are risk preferences explaining gender differences in investment behavior?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 101(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:rexezz:s0193-2306(08)00004-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.