WORKING PAPERS

Risk Sharing and Strategic Choice, with Brendan Daley [February 2024].
Supplementary Appendix
Abstract

We undertake a decision-theoretic analysis of a model of bilateral risk sharing, conceptualized in two stages: in the first stage agents choose risky endowments (Savage acts), and in the second stage they form a risk-sharing arrangement. Only the first-stage choices are observable to the analyst. We formulate axioms that put joint restrictions on best responses in the first stage and a representation result according to which agents behave as if they are risk averse expected-utility maximizers who anticipate the subsequent sharing arrangement. All the parameters of the model, including the sharing arrangement, can be identified from this first-stage choice data.

Adaptive Preferences: An Evolutionary Model of Non-Expected Utility and Ambiguity Aversion, with Todd Sarver [December 2023].
Abstract

We enrich an evolutionary model with common and idiosyncratic uncertainty as in Robson (1996) by allowing for hidden actions (or phenotypic flexibility). In contexts where common uncertainty is ambiguous and idiosyncratic uncertainty is risky, the model generates both ambiguity aversion and non-expected-utility preferences for risk, thereby providing a link between the two types of behavior. While the general evolutionarily optimal objective function does not have an obvious similarity to functional forms studied in the literature, our main results show that it can be recast in a form that is immediately relatable to some common models of ambiguity aversion and non-expected utility. The special cases we consider include ones that embed rank-dependent utility or divergence preferences within a model of ambiguity aversion.

Information-dependent Utilities and Beliefswith David Dillenberger and R. Vijay Krishna [April 2020].
Abstract

We axiomatize a model of preferences over menus of acts in which not only beliefs but also state-dependent utilities depend on the individual’s choice of information. Our most general model features both contemplation about the appropriate way to evaluate alternatives as well as acquisition of information about the payoff relevant state of the world, before a choice is made. We then focus on the special case where the value of alternatives depends directly and exclusively on the state of the world and on the choice of information about that state.