Irrational Economist_ Making Decisions in a Dangerous World - Erwann Michel-Kerjan [148]
10 As depicted in the previous chapter by Colin Camerer, arguably one of the leading lights in neuroeconomics, the first player in a UG, the proposer, offers a share of money he owns to another player, the responder. If the responder accepts the proposer’s offer, both players keep their respective splits. If the responder doesn’t, neither receives any money. If both the proposer and the responder were behaving as rational maximizers, the proposer would offer the minimum amount and the responder would accept it, with even a penny being better than nothing. This is rarely the case in the UG.
11 The technique used in this procedure, which is called repeated transcranial magnetic stimulation (rTMS), momentarily disrupts the workings of a targeted brain area.
12 D. Knoch et al., “Diminishing Reciprocal Fairness by Disrupting the Right Prefrontal Cortex,” Science 314, no. 5800 (2006): 829-832.
13 Even more puzzling was the fact that their ability to judge the offers as unfair remained unchanged.
14 This study clearly showed that the decision to accept can change while the judgment regarding the (un)fairness of the offer does not, therefore supporting the claim that judgments do not always determine decisions.
15 O. Oullier and F. Basso, “Embodied Economics: How Bodily Information Shapes the Social Coordination Dynamics of Decision Making,” Philosophical Transactions of the Royal Society: Biological Science (2009), forthcoming.
16 O. Oullier et al., “The Coordination Dynamics of Economic Decision Making: A Multilevel Approach to Social Neuroeconomics,” IEEE Transactions on Neural Systems and Rehabilitation Engineering 16, no. 6 (2008): 557-571.
17 If you are interested in this question, see the great book by Nobel Laureate Thomas Schelling: Micromotives and Macrobehavior (New York: Norton, 1978).
18 Examples include the Neuroscience and the Law program in the United States and, in France, the Neuroscience and Public Policy program, a unique initiative that I am in charge of at the prime minister’s Center for Strategic Analysis.
Chapter 11 Kousky, Pratt, and Zeckhauser: Virgin Versus Experienced Risks
1 J. McCune, “Car Crashes into House, Resident in Serious Condition,” The Evening Sun (Hanover, Pennsylvania), September 22, 2008.
2 Kip Viscusi and Richard Zeckauser, Journal of Risk and Uncertainty (2003).
3 Kip Viscusi and Richard Zeckauser, “Recollection Bias and the Combat of Terrorism,” Journal of Legal Studies 34 ( January 2006): 27-55.
4 Carolyn Kousky, “Learning from Extreme Events: Risk Perceptions After the Flood,” Land Economics forthcoming (2010).
5 Note that if the 1993 floods, say, quadrupled expected losses in the two different floodplains, the effect on housing values in the 100-year floodplain would have been much greater, contrary to our findings but consistent with our conjectures. The factor by which properties in the 500-year floodplain are updated may be greater than that in the 100-year floodplains, but the absolute amount could be less. For example, houses in the 100-year floodplain may already be reduced in price 18 percent and those in the 500-year floodplain by 1 percent. A flood occurs and the homes in the 100-year floodplain have a factor of 3 update, while those in the 500-year floodplain have a factor of 5 update. The factor is thus smaller, but the absolute change in price is larger in the 100-year floodplain.
Chapter 12 Öncüler: How Do We Manage an Uncertain Future?
1 D. Ellsberg, “Risk, Ambiguity and the Savage Axioms,” Quarterly Journal of Economics 75 (1961): 643-669.
Chapter 14 Sunstein and Zeckhauser: Dreadful