an empirical analysis of life cycle fertility and female labor supply this paper examines us household fertility and female labor supply over the life cycle using data from the panel study of income dynamics the authors investigate how maternal time inputs and market expenditures on offspring as well as the benefits they yield their parents vary with ages of offspring and influence female labor supply and contraceptive behavior the econometric framework combines a female labor supply model and a contraceptive choice index function it also accounts for the fact that conceptions are not perfectly controllable events using longitudinal data on married couples the authors estimate these equations and test alternative specifications of the technologies governing child care the findings suggest that while parents cannot perfectly control conceptions variations in child care costs do affect life cycle spacing of births furthermore the results demonstrate the gains of modeling the linkages between female labor supply and fertility behavior at the household level authors modified

the entrepreneur s idea and outside finance theory and evidence about entrepreneurial roles abstract we study the problem faced by the entrepreneur seeking outside support to turn an entrepreneurial idea into a successful innovation specifically a successful technological innovation resulting from research and development the paper develops and tests the hypothesis that as an entrepreneur s innovative idea becomes more complex the entrepreneur will find it more difficult to obtain outside finance and then outside support more generally for the commercialization of the idea consequently the entrepreneur will be more likely to take on additional roles beyond providing the essential idea the evidence supports the hypothesis that other things being the same an entrepreneur with a more complex idea will have greater difficulty obtaining outside finance and will be more likely to take on the additional roles of development production marketing and distribution that are necessary for successful innovation

preference heterogeneity in experiments comparing the field and laboratory do laboratory experiments provide a reliable basis for measuring field preferences economists recognize that preferences can differ across individuals but only a few attempts have been made to elicit individual preferences for representative samples of a population in a particular geographical area region or country our primary objective is to directly compare estimates of preferences elicited from a convenience sample and the estimates for the wider population from which that sample is drawn we examine the strengths and weaknesses of laboratory and field experiments to detect differences in preferences over risk and time that are associated with standard observable characteristics of the individual

teen motherhood and abortion access it is argued that the net effect of any restriction of abortion access on birth rates is an empirical question this study examines the impact of access to abortion on county teenage birth rates birth rates are expected to decrease by 1 among white adolescents aged 15 19 years for a 25 mile increase in the distance to the nearest abortion provider particularly among in wedlock births data are obtained from 1973 88 national natality local area summary files for counties in the us and four other national sources data did not provide useful information on the empirical relationship between access and birth rate for densely populated urban areas cross sectional findings that had omitted variable bias indicate that an increase of 25 miles in distance to a provider was associated with an additional 1 4 births per 1000 white teenage women or a 3 increase in the average teen birth rate of 45 1000 white teenagers the findings from a county fixed effects model that controlled for omitted variable bias indicate that an increase of 25 miles was associated with a reduction in teen births of 0 5 1000 or about 1 of the mean birth rate both medicaid restrictions and parental consent laws were negative and significant and more negative in poor and more isolated counties the state year effects models did not change findings on distance and medicaid restriction effects the effects of changes in timing of laws suggests that laws followed preexisting trends changes in distance to provider were primarily in the first 2 years following the change out of wedlock births were unaffected by changes in distance to providers the out of wedlock teen birth rate increased with a complete ban on abortions fewer wanted births were associated with small restrictions findings imply that closing of clinics during 1977 88 had an impact on teen birth rates of under one tenth of 1 the 20 increase in teen births was unexplained

affirmative action in higher education how do admission and financial aid rules affect future earnings this paper addresses how changing the admission and financial aid rules at colleges affects future earnings i estimate a structural model of the following decisions by individuals where to submit applications which school to attend and what field to study the model also includes decisions by schools as to which students to accept and how much financial aid to offer simulating how black educational choices would change were they to face the white admission and aid rules shows that race based advantages had little effect on earnings however removing race based advantages does affect black educational outcomes in particular removing advantages in admissions substantially decreases the number of black students at top tier schools while removing advantages in financial aid causes a decrease in the number of blacks who attend college

marshall s versus jacobs externalities in firm innovation performance the case of french industry galliano d magrini m b and triboulet p marshall s versus jacobs externalities in firm innovation performance the case of french industry regional studies this paper analyses the influence of different types of spatial externalities related to the location of firms on their innovation performance and how those externalities combine in the territories with regard to the marshall jacobs dichotomy the originality of this study also lies in the consideration of a larger definition of the firm one that takes into account the location of all its units based on a dataset of french industrial firms and specific indicators to evaluate the specialization and or diversification of the employment zones the impacts of the spatial profile of the firm on its innovation performance are tested

family planning in a life cycle model with income risk several us states have recently restricted the access to abortions we study fertility intentions and how family planning and abortions are used as mechanisms to control fertility among couples facing income risk we formulate and estimate a life cycle consumption saving model with uninsurable income risk and imperfect contraceptive control that matches fertility behavior in the british household panel survey bhps well we use the estimated model to investigate how family planning and abortions are used to control fertility in our model our simulations suggest that income risk affects family planning and that abortion is used to control fertility due to the presence of income risk this indicates that the availability of abortions might play a role as an insurance mechanism

gender differences in the allocation of assets in retirement savings plans in 1995 40 percent of working men and 32 percent of working women were covered by a defined contribution dc plan a distinguishing characteristic of these plans is that workers can generally choose how their assets are invested using data from the 1992 and 1995 surveys of consumer finances scf this paper examines whether workers differ systematically by gender in the allocation of assets in dc plans previous researchers have reported that many workers tend to invest their retirement assets too conservatively and in particular that women are less likely than men to invest in risky assets such as stocks in the presence of an equity premium a lower propensity by women to invest in stocks could translate into large differences in the accumulation of financial wealth for retirement we establish that gender differences in investment decisions exist though they are more complicated than previous studies have suggested we show that these differences are not completely explained by differences in individual or household characteristics a few studies have examined gender differences in investment decisions vickie l bajtelsmit and jack l vanderhei 1997 richard p hinz et al 1997 these studies use administrative data and report that women tend to invest their retirement funds in less risky vehicles than men michael haliassos and carol c bertaut 1995 use the 1983 scf to examine why such a large fraction of households do not own any stock they report that gender does not have a significant effect on the probability of owning stock though gender differences are not the focus of their paper what these data sources lack haliassos and bertaut being the exception is a rich set of demographic and other variables on households that theory predicts should affect investment behavior this paper adds to the literature by examining gender differences in investment decisions conditioning on such variables the results highlight the importance of including marital status risk aversion measures and the portfolio of assets held outside dc plans when examining gender differences in investment decisions in these plans

the effect of spending cuts on teen pregnancy in recent years english local authorities have been forced to make significant cuts to devolved expenditure in this paper we examine the impact of reductions in local expenditure on one particular public health target reducing rates of teen pregnancy contrary to predictions made at the time of the cuts panel data estimates provide no evidence that areas which reduced expenditure the most have experienced relative increases in teenage pregnancy rates rather expenditure cuts are associated with small reductions in teen pregnancy rates a result which is robust to a number of alternative specifications and tests for causality underlying socio economic factors such as education outcomes and alcohol consumption are found to be significant predictors of teen pregnancy

individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

geography industrial organization and agglomeration this paper makes two contributions to the empirical literature on agglomeration economies first the paper uses a unique and rich database in conjunction with mapping software to measure the geographic extent of agglomerative externalities previous papers have been forced to assume that agglomeration economies are club goods that operate at a metropolitan scale second the paper tests for the existence of organizational agglomeration economies of the kind studied qualitatively by saxenian 1994 this is a potentially important source of increasing returns that previous empirical work has not considered results indicate that localization economies attenuate rapidly and that industrial organization affects the benefits of agglomeration

spatial evolution of the computer industry in the usa abstract this paper examines the spatial evolution of computers across 317 metro areas in the usa since the introduction of the personal computer we start by examining the relative distribution of employment across cities examining how that distribution changes in 1977 1992 and how cities move through the distribution for computers transition matrices are stationary with the industry exhibiting no tendency to settle down nor any tendency of retrenchment during periods of national high tech employment decline there is no tendency of the relative size distribution of computer employment to collapse go bimodal etc overall computers exhibit some turbulence with dramatic big winners and losers among cities as well as persistence for some cities in employment shares in attracting or repelling an industry urban heterogeneity is important large well educated cities near san jose have a much greater chance of attracting high tech employment much lower mean first passage times moving up states and less chance of losing it in assessing the determinants of persistence in local employment patterns we examine sources of productivity growth we find strong evidence of significant dynamic own industry externalities for single plant firms and little evidence of urbanization jacobs knowledge type externalities corporate plants in computers seem to be self reliant and not really influenced by externalities

habit persistence and teen sex could increased access to contraception have unintended consequences for teen pregnancies we develop a dynamic discrete choice model of teen sex and pregnancy that incorporates habit persistence habit persistence has two sources here the first is a fixed cost of having sex which relates to a moral or psychological barrier that has been crossed the first time one has sex the second is a transition cost whereby once a particular relationship has progressed to sex it is difficult to move back we estimate significant habit persistence in teen sex implying that the long run effects of contraception policy may be different from their short run counterparts especially if the failure rate of contraception is sufficiently large programs that increase access to contraception are found to decrease teen pregnancies in the short run but increase them in the long run

decisions error and heterogeneity probabilistic choices or choice errors may play an important supporting role in shaping observed risky choices and a variety of restrictions on such choice probabilities play the role of identifying restrictions in empirical decision research we test six restrictions in the context of common ratio effect data for a general class of theories of risky choice two restrictions one for aggregate and one for individual data are supported but none of the heterogeneity restrictions that make the aggregate data model powerful survive scrutiny nor do estimable parametric versions of the individual data model there is room for new stochastic identifying restrictions in empirical decision research

health risky behaviour and the value of medical innovation for infectious disease we propose a dynamic framework to study the value of medical innovation in the context of infectious disease we apply our framework to evaluate an hiv treatment breakthrough known as haart the model captures how in lowering both the expected cost and likelihood of hiv infection haart reduced the implicit price of risky sex forward looking agents responded by optimally shifting their behaviour the model also imposes equilibrium constraints explicitly capturing how optimal shifts in behaviour affect equilibrium choices by changing both infection probabilities and the ease of finding partners willing to engage in risky sex using the estimated model we conduct counterfactual simulations to compute the value of haart from the perspective of uninfected agents this includes the option value of the innovation along with value accruing from changes in sex behaviour in response to haart introduction we also calculate the added value of a fully functional vaccine from the perspective of both infected and uninfected agents where infected agents benefit from a vaccine due to resulting shifts in market equilibrium

the paradox of the pill heterogeneous effects of oral contraceptive access the twentieth century saw dramatic increases in nonmarital births concentrated heavily among poor and working class women in this paper we investigate whether the oral contraceptive pill played a causal role in the rise of nonmarital births exploiting exogenous variation in laws governing access to the pill we find that changes in marital access to the pill increased the nonmarital birthrate by between 15 and 18 accounting for about one third of the overall increase in nonmarital births these effects are concentrated almost entirely among women whose fathers did not graduate high school and among minority women we also document that the pill increased spacing between first and second births and lowered the probability that a woman obtained a high school diploma consistent with increases in nonmarital births we find no evidence that postsecondary education levels were influenced by pill access and no evidence that nonmarital births move with male employment patterns our findings add to a growing literature which documents the power of the pill to shape women s lives in broadly heterogenous ways with minority and less well educated women bearing the brunt of the losses a phenomenon we call the paradox of the pill jel j12 j13 i24

are women more risk averse we find that single women exhibit relatively more risk aversion in financial decision making than single men using u s sample data we examine household holdings of risky assets to determine whether there are gender differences in financial risk taking as wealth increases the proportion of wealth held as risky assets is estimated to increase by a smaller amount for single women than for single men gender differences in financial risk taking are also influenced by age race and number of children greater financial risk aversion may provide an explanation for women s lower levels of wealth compared with men s jel j16 d81 g11

the dynamics of agglomeration externalities along the life cycle of industries neffke f henning m boschma r lundquist k j and olander l o the dynamics of agglomeration externalities along the life cycle of industries regional studies this paper investigates the changing roles of agglomeration externalities along the industry life cycle it is argued that industries have different agglomeration needs in different stages of their life cycles because their mode of competition innovation intensity and learning opportunities change over time for twelve swedish manufacturing industries it is determined for each year between 1974 and 2004 whether the industry is in a young intermediate or mature stage whereas marshall arrow romer mar externalities steadily increase with the maturity of industries the effects of local diversity jacobs externalities are positive for young industries but decline and even become negative for more mature industries neffke f henning m boschma r lundquist k j et olander l o la dynamique des effets externes d agglomeration tout

affirmative action programs and business ownership among minorities and women affirmative action programs are commonly used as a means to level the playing field for minority and women owned firms in public procurement markets and therefore may be a positive factor in business entry and survival to the extent that affirmative action programs also apply to traditional labor markets however they may alter the opportunity cost of starting a business we utilize the elimination of affirmative action in california and washington states through voter initiatives to identify the effect of affirmative action on minority and female self employment rates in our base specifications we find evidence of modest increases in self employment among minorities and women in both california and washington after elimination of affirmative action consistent with the hypothesis that the opportunity cost of starting a business fell due to restricting opportunities in the traditional labor markets the sign of the estimated effect however is not uniformly positive when considering specific race gender groups and the statistical significance of the main results is somewhat sensitive to the choice of control states

r d cooperation and failures in innovation projects empirical evidence from french cis data the second french community innovation survey cis indicates that 14 of rd collaborating firms had to abandon or delay their innovation projects due to difficulties in their partnerships an outcome which we term cooperation failures controlling for sample selection on the cooperation decision our estimates show that firms collaborating with competitors and public research organizations pros especially when they are foreign are more likely to delay or stop an innovation project because of difficulties encountered in their rd partnerships more surprisingly firms collaborating with their suppliers also face a higher risk of cooperation failures at least for pros firms can reduce the risk of cooperation failures through previous experiences in partnerships larger firms and group subsidiaries are less likely to face cooperation failures and so do firms in industries with a strong appropriability regime

entrepreneurship social mobility and income redistribution in south india development economists have been preoccupied with the problem of increasing the size of the gnp pie to the relative neglect of its distribution despite the recent disenchantment with the viewpoint that all classes share in the benefits of industrial growth empirical data on the distribution of income business opportunity and economic power are in short supply many of the studies on entrepreneurship and economic development when they are not apologetics for ruthless capitalist exploitation as paul baran suggests extol the achievements of the capitalist entrepreneur without examining class origins and monopoly advantage joseph schumpeter sees entrepreneurs irrespective of class origin as heroic figures with the dream and will to found a private kingdom to conquer adversity to achieve success for its own sake and to experience the joy of creation for gustav papanek 1967 the private entrepreneur who is frugal diligent far sighted remarkably able and willing to take political risks is in large part responsible for the success of pakistan in achieving rapid industrialization

university spin out companies and venture capital abstract the creation of university spin out companies that create wealth is a major policy objective of governments and universities finance is a catalyst of this wealth creation yet access to venture capital is a major impediment faced by these companies in this article we adopt a finance pecking order perspective to examine the problems faced by those university spin out companies seeking to access venture capital we triangulate evidence from spin out companies university technology transfer offices and venture capital firms in the uk and continental europe to identify the problems and to suggest policy developments for these parties as well as government we compare perceptions of high tech venture capital firms that invest in spin outs with those that do not and also consider vcs views on spin outs versus other high tech firms our evidence identifies a mismatch between the demand and supply side of the market in line with the pecking order theory venture capitalists prefer to invest after the seed stage however in contrast to the pecking order theory ttos see venture capital as more important than internal funds early on we develop policy implications for universities technology transfer offices academic entrepreneurs venture capital firms and government and suggest areas for further research

private investor participation and commercialization rates for government sponsored research and development would a prediction market improve the performance of the sbir programme an objective of the us small business innovation research sbir programme is the private sector commercialization of funded rd our analysis of department of defense dod phase ii awards suggests that the estimated probability of commercialization is only 0 47 we investigate econometrically whether outside private investors have useful information about proposed sbir projects prospects for commercialization our findings suggest that they do thereby providing support for the possibility that a prediction market could improve the performance of the sbir programme

heterogeneity in risky choice behaviour in a broad population we analyse risk preferences using an experiment with real incentives in a representative sample of 1 422 dutch respondents our econometric model incorporates four structural parameters that vary with observed and unobserved characteristics utility curvature loss aversion preferences towards the timing of uncertainty resolution and the propensity to choose randomly rather than on the basis of preferences we find that all four parameters contribute to explaining choice behaviour the structural parameters are significantly associated with socio economic variables but it is essential to incorporate unobserved heterogeneity in each of them to match the rich variety of choice patterns in the data

microcredit an answer to the gender problem in funding microfinance institutions mfis target people excluded from the traditional banking system by providing start up capital to these under financed individuals they enable a greater number of women to start their own business particularly in sectors where initial capital requirements are high our study follows a portfolio of 3 640 microcredit applicants in france over the 2000 2006 time period identifying mfi client profiles and bringing to light gender differences in borrowers compared to a wider sample of entrepreneurs this study shows that the male female gap found amongst company creators is also maintained amongst the clienteles of mfis empirical results also suggest that gender is a decisive factor regarding the amount of credit provided to borrowers when comparing with other factors in the borrower and firm profile thus to a certain extent mfis are found to reinforce gender inequalities in france

rank stock order and epidemic effects in the diffusion of new process technologies an empirical model in this article we construct a general duration model of technology adoption that incorporates the main factors discussed in different theories of diffusion of new process technologies the model is applied to data on diffusion of cnc in the uk engineering industry although we find strong evidence in support of rank and endogenous learning effects there seems to be little evidence in support of the stock and order effects the main factors affecting the diffusion of cnc are found to be endogenous learning firm size industry growth rates the cost of the technology and expected changes in the cost of the technology

on the marshall jacobs controversy it takes two to tango the literature is inconclusive as to whether marshallian specialization or jacobian diversification externalities favour regional innovativeness the specialization argument poses that regional specialization towards a particular industry improves innovativeness in that industry regional specialization allows for knowledge to spill over among similar firms by contrast the diversification thesis asserts that knowledge spills over between firms in different industries causing diversified production structures to be more innovative building on an original database we address this controversy for the netherlands we thereby advance on the literature by providing a two level approach at the region s and the firm s level at the regional level we compare specialized with diversified regions on numbers of accommodated innovators at the firm level we establish causalities between externalities and degree of innovativeness the results unambiguously suggest marshallian externalities specialized regions accommodate increased numbers of innovating firms and consistently incumbent firms innovativeness increase with regional specialization once the product has been launched innovators in diversified jacobian regions appear to be more successful in commercial terms than innovators in specialized marshallian regions

leveraging entrepreneurship through private investments does gender matter using project data from a random sample of phase ii research awards from the national institutes of health sbir program we estimate the relative probability that woman owned firms are able to attract private investments to fund the transition of the technology developed under the sponsorship of the sbir program to an innovation to enter the market we find that women owned firms are as much as 16 points less likely to attract private investment dollars compared to male owned firms factors excluding the size of the sbir award held constant women owned firms that received larger awards performed substantially better although the sbir program has a legislated directive to increase the participation of woman owned firms in the program our findings suggest that it might not be sufficient to overcome market perceptions about the profitability of such investments actually bringing a developed technology to market

incorporating a stochastic element into decision theories abstract recent papers by harless and camerer 1994 and hey and orme 1994 have employed two rather different models of errors in decision making under uncertainty the present paper develops a third approach and shows how different stochastic specifications of the same deterministic core theory may generate very different and sometimes surprising hypotheses

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

an analysis of out of wedlock childbearing in the united states this paper relates the erosion of the custom of shotgun marriage to the legalization of abortion and the increased availability of contraception to unmarried women in the united states the decline in shotgun marriage accounts for a significant fraction of the increase in out of wedlock first births several models illustrate the analogy between women who do not adopt either birth control or abortion and the hand loom weavers both victims of changing technology mechanisms causing female immiseration are modeled and historically described this technology shock hypothesis is an alternative to welfare and job shortage theories of the feminization of poverty excerpt

modeling heterogeneity and state dependence in consumer choice behavior in frequently purchased consumer goods markets consumer brand choices exhibit substantial persistence across purchase occasions in this article i estimate a choice model that admits of both heterogeneity in preferences and true state dependence as sources of this persistence using nielsen scanner data on ketchup i find evidence for true state dependence in the choice process even after controlling for a rich heterogeneity structure simulation of the model indicates that the long term effect of a promotion induced purchase on future purchase probabilities is positive but small

editorial geography of innovation new trends and implications for public policy renewal the aim of this special issue is threefold firstly it highlights major recent methodological advances to address the two key issues referred to above improving extended kpf analyses on the one hand and developing strategic approaches using microeconomic data on the other br br two papers are presented using knowldge production functions kpf they offer new methodologies to deal with the issue of regional heterogeneity when estimating kpf at the regional level in europe br br using more microeconomic approaches three papers contribute to the second topic they use micro economic data to show how firms strategies may interact with the local environment and impact upon the determinants of agglomeration dynamics br br secondly this issue draws attention to interesting new results emerging from the application of these new methodologies to the analysis of innovation dynamics in european regions and shows how they can help one to revisit some main tenets of received wisdom concerning the rationale and impact of public policies on the geography of innovation br br finally this special issue also identifies issues that still require further research particularly in relation to the development of new methodologies for the evaluation of public policies integrating the spatial dimension and the interdependencies between public policies implemented at different regional scales which remains no more than an emerging field in the geography of innovation br br the special issue concludes with a paper presenting a new theoretical framework for the analysis and evaluation of local innovation public policies using simulation methodology all these papers have important policy implications

the gender gap in federal and private support for entrepreneurship the role of gender in entrepreneurship has been thoroughly investigated however less is known about gender differences in access to private investment when attempting to develop a new technology in this paper we use data collected by the national research council of the national academies to estimate differences between the probability that a female owned firm and a male owned firm both conducting research funded by the small business innovation research program will receive private investment funding to help to commercialize the funded technology we find that female owned firms are disadvantaged in their access to private investment especially in the west and northeast regions of the usa

urban economic structure technological externalities and intensive land use in china based on theories about the influences of urban economic structure on intensive land use this study analyses the impacts of two main types of urban economic structure in china specialized economy and diversified economy on intensive urban land use using spatial panel techniques and large scale urban panel data the results indicate that there is significant spatial correlation in urban economic structure as well as intensive land use in every city a diversified economy has a significant positive effect on the improvement of intensive land use whereas the effect of a specialized economy is not significant the effects of the diversified and specialized economies on intensive land use through technological externalities are either negative or positive depending on city size while the threshold effect the minimum threshold population for the economy to stimulate intensive land use is about 496 700 people for the specialized economy and about 546 000 people for the diversified economy

a dynamic model of contraceptive choice of spanish couples in this paper we propose a simple dynamic stochastic model of sterilization and contraceptive use and we estimate its structural parameters using a sample of married couples from the 1995 spanish family and fertility survey the estimated structural model improves on previous studies in terms of its ability to rationalize observed behavior the large proportion of women contracepting at parity 0 is interpreted as evidence of precautionary contraceptive behavior allowing for simple forms of permanent unobserved heterogeneity across couples in their ability to conceive has important implications for estimates of utility and cost parameters our estimates of child valuation parameters imply that most spanish couples would have two children but significant deviations from this goal are brought about by imperfect and costly fertility control our simulations suggest that the introduction of sterilization has reduced fertility by an average of 0 2 children per couple and that the availability of more effective reversible contraceptive methods would reduce expected fertility by up to 0 4 children per couple

eliciting von neumann morgenstern utilities when probabilities are distorted or unknown this paper proposes a new method the gamble tradeoff method for eliciting utilities in decision under risk or uncertainty the elicitation of utilities to be used in the expected utility criterion turns out to be possible even if probabilities are ambiguous or unknown a disadvantage of the tradeoff method is that a few more questions usually must be asked to clients also the lotteries that are needed are somewhat more complex than in the certainty equivalent method or in the probability equivalent method the major advantage of the tradeoff method is its robustness against probability distortions and misconceptions which constitute a major cause of violations of expected utility and generate inconsistencies in utility elicitation thus the tradeoff method retains full validity under prospect theory rank dependent utility and the combination of the two i e cumulative prospect theory the tradeoff method is tested for monetary outcomes and for outcomes describing life duration we find higher risk aversion for life duration but the tradeoff method elicits similar curvature of utility apparently the higher risk aversion for life duration is due to more pronounced deviations from expected utility

narrow bracketing and dominated choices an experiment by tversky and kahneman 1981 illustrates that people s tendency to evaluate risky decisions separately can lead them to choose combinations of choices that are first order stochastically dominated by other available combinations we investigate the generality of this effect both theoretically and experimentally we show that for any decisionmaker who does not have constant absolute risk averse preferences and who evaluates her decisions one by one there exists a simple pair of independent binary decisions where the decisionmaker will make a dominated combination of choices we also characterize as a function of a person s preferences the amount of money that she can lose due to a single mistake of this kind the theory is accompanied by both a real stakes laboratory experiment and a large sample survey from the general u s population replicating tversky and kahneman s original experiment where decisionmakers with prototypical prospect theory preferences will choose a dominated combination we find that 28 of the participants do so in the survey we ask the respondents about several hypothetical large stakes choices and find higher proportions of dominated choice combinations a statistical model that estimates preferences from the survey results is best fit by assuming people have utility functions that are close to prospect theory value functions and that about 83 of people bracket narrowly none of these results varies strongly with the personal characteristics of participants we also demonstrate directly that dominated choices are driven by narrow bracketing when we eliminate the possibility of narrow bracketing by using a combined presentation of the decisions the dominated choices are eliminated in the laboratory experiment and are greatly reduced in the survey

violations of cumulative prospect theory in mixed gambles with moderate probabilities in a classroom choice experiment with mixed gambles and moderate probabilities we find severe violations of cumulative prospect theory cpt and of markowitz stochastic dominance our results shed new light on the exchange between levy and levy 2002 and wakker 2003 in this journal

financial decision making are women really more risk averse 40 males 33 females gain gambling gain domain loss gambling loss domain a contextual frames b abstract gambling frames studies the application of experimental methods provided stronger control of the economic environment in which decisions were made we elicited data which call into question the prevalence of stereotypic risk attitudes in financial decision making first we find that the comparative risk propensity of male and female subjects is strongly dependent on the financial decision setting second and more important we observe no gender differences in risk propensity when subjects face contextual decisions since in practice financial decisions are always contextual our results suggest that the above gender stereotype may not reflect true male and female attitudes toward financial risks i gender specific risk behavior an experimental design our experiment was designed to examine gender specific risk propensity in decisions relevant for investors and managers table 1 gives an overview of the experimental design in the main treatment we implemented risky choices in the form of investment and insurance decisions choice behavior in this treatment henceforth called the context treatment directly measures the risk behavior of male and female subjects in contextual financial decisions we also ran a control treatment in which the same risky choices were presented as abstract gambling decisions this control treatment henceforth called the abstract treatment allows us to validate the risk behavior induced by our experimental procedure in the light of the above mentioned gambling evidence in the context treatment subjects were confronted with risky choices in two different decision contexts subjects first had to complete a series of investment decisions they were then presented with a series of identical choices this time however framed as insur1 wealth effects from income differences outside the laboratory may still affect risk behavior in our experiment they are controlled for in our model 2 experimental instructions are available in german from the authors or in english from our web page www wif ethz ch publikationen htm ance decisions each investment and insurance decision incorporated a choice between a risky lottery and a certain payoff with the series of choices implemented in the two frames we elicited our subjects certainty equivalents for the same four risky lotteries l1 l2 l3 l4 in both contexts we implemented two frames in the context treatment in order to measure the risk propensity of subjects toward both perceived gains and perceived losses in both frames all possible payoffs for each decision were positive in the investment frame these payoffs were also presented as gains while in the insurance frame the same payoffs were presented as losses relative to an initial endowment therefore elicited certainty equivalents in the investment frame measure subjects risk propensities in the gain domain while certainty equivalents in the insurance frame measure risk propensity in the loss domain if in contextual financial decisions female subjects are generally more risk averse than men our results should display ceteris paribus lower female certainty equivalents in both the investment and insurance frames 3 the four lotteries l1 l2 l3 and l4 each had two possible outcomes payoffs in swiss francs 1 sfr a 0 60 and their probabilities were 30 sfr 6 10 sfr 6 30 sfr 2 10 sfr 2 30 sfr 6 10 sfr 6 and 50 sfr 2 20 sfr 2 respectively 4 experimental evidence suggests that individual risk propensity will vary systematically between the gain and loss domain daniel kahneman and amos tversky 1979 383 vol 89 no 2 gender and economic transactions 3y16 my68 mp 383 friday dec 10 08 20 am lp aer my68 figure 1 differences in mean certainty equivalents ce between male and female subjects by frame note certainty equivalents and male female differences are measured in swiss francs in the abstract treatment we confronted a different group of subjects with exactly the same risky decisions as those in the main treatment however as mentioned before all choices in this control treatment were framed as abstract gambling decisions again two frames were implemented in the gaingambling and loss gambling frames we measured the risk attitudes of subjects toward gambles in the gain and loss domain respectively subjects in both treatments were told in advance that one of their choices would determine their experimental earnings further all subjects completed a post experimental questionnaire which yielded information on each subject s disposable income this information is necessary to exclude wealth effects due to income differences outside the laboratory as an explanation of gender specific choice behavior

the effect of medicaid abortion funding restrictions on abortions pregnancies and births this paper considers whether state medicaid abortion funding restrictions affect the likelihood of getting pregnant having an abortion and bearing a child we exploit a natural experiment afforded by supreme court decisions and employ more traditional multivariate models with alternative fixed effect specifications an analysis of 12 years of state level data indicate that restrictions are associated with a reduction in abortions and either no change or a reduction in births implying fewer pregnancies subsequent analysis of the national longitudinal survey of youth nlsy is consistent with these findings and show the response is concentrated among the low income population

an index of loss aversion to a considerable extent risk aversion as it is commonly observed is caused by loss aversion several indexes of loss aversion have been proposed in the literature the one proposed in this paper leads to a clear decomposition of risk attitude into three distinct components basic utility probability weighting and loss aversion the index is independent of the unit of payment the main theorem shows how the indexes of different decision makers can be compared through observed choices

estimating individual discount rates in denmark a field experiment we estimate individual discount rates with respect to time streams of money using controlled laboratory experiments these discount rates are elicited by means of field experiments involving real monetary rewards the experiments were carried out across denmark using a representative sample of 268 people between 19 and 75 years of age individual discount rates are estimated for various households differentiated by socio demographic characteristics such as income and age our conclusions are that discount rates are constant over the 12 month to 3 year horizons used in these experiments and that discount rates vary substantially with respect to several socio demographic variables hence we conclude that it would be reasonable to assume constant discount rates for specific household types but not the same rates across all households

consistency and heterogeneity of individual behavior under uncertainty by using graphical representations of simple portfolio choice problems we generate a very rich dataset to study behavior under uncertainty at the level of the individual subject we test the data for consistency with the maximization hypothesis and we estimate preferences using a two parameter utility function based on faruk gul 1991 this specification provides a good interpretation of the data at the individual level and can account for the highly heterogeneous behaviors observed in the laboratory the parameter estimates jointly describe attitudes toward risk and allow us to characterize the distribution of risk preferences in the population

on the use of expectations data in estimating structural dynamic choice models despite the importance of expectations in models of decision behavior under uncertainty few empirical economists have made use of subjective expectations data in estimating such models assuming that expectations about future behavior accurately portray optimal future behavior conditional on current information it is shown that such data can provide similar information about the decision process as can data on current or retrospective behavior the value of self reported choice expectations is illustrated by using information on respondents expected future occupation in the estimation of a structural dynamic model of teacher career decisions under uncertainty

the behavioral dynamics of youth smoking individual smoking behavior persists over time but the extent to which we can attribute this repeated behavior to past use or individual heterogeneity is not well understood to address this empirical question we develop a dynamic model of smoking decisions which explicitly accounts for the impact of endogenous previous smoking behavior and allows for observed and unobserved individual heterogeneity the model is estimated using longitudinal data on a representative sample of teens from all 50 united states from 1988 to 1992 we have two main findings first we show that there is a significant causal role for past cigarette consumption even after controlling extensively for observed and unobserved heterogeneity second we find measurable evidence of different sensitivities to cigarette price depending on past use these two findings suggest that a cigarette price increase will have a larger aggregate effect in the long run than in the short run as more individuals accumulate in the price sensitive non smoking group