My research focuses on behavioral economics. My current work reflects my broad interests in both experiments and theory and covers different aspects of decision making under risk and uncertainty. A common theme in my papers is that people do not understand probabilities and risks well, and therefore they neither insure themselves nor take preventive measures optimally.
Zooming in on ambiguity attitudes. (Job market paper)
(with Aurélien Baillon)
International Economic Review (forthcoming November 2018)
Empirical studies of ambiguity attitudes to date have focused on events of moderate likelihood. Extrapolation to rare events requires caution. In an Ellsberg-like experiment with very unlikely events, we measured ambiguity attitudes with neither assumptions on subjects’ beliefs nor restrictions to specific ambiguity models. Very unlikely events were overweighted, being weighted more strongly in isolation than when part of larger events. Using latent profile analysis, we classified the subjects in terms of deviations from ambiguity neutrality. One third behaved close to ambiguity neutrality. The others exhibited overweighting of rare events. Such behavior can lead to money-pump situations.
When risk perception gets in the way: Probability weighting and underprevention.
(with Aurélien Baillon, Han Bleichrodt, Johannes Jaspersen, and Richard Peter)
under minor R&R for Operations Research
Personal decisions about health hazards are the main cause of impaired health and premature death. People smoke and eat too much and exercise too little. The lack of preventive efforts is surprising given their proven effectiveness. Arrow’s (1963) classical paper suggested that moral hazard might be a reason for underprevention but Ehrlich and Becker (1972) challenged this explanation. In this paper, we show that underprevention might be caused by misperceived probabilities. We derive when and how probability weighting gets in the way of prevention by blurring its benefits. We use a general model of prevention, encompassing several special cases from the literature. We also show how perceived ambiguity makes the problem of underprevention even worse by amplifying the effect of probability weighting.
Informing versus giving feedback: A field experiment on phishing risks.
(with Aurélien Baillon, Jeroen de Bruin, Bram van Dijk*, and Evelien van de Veer*) (* from the Ministry of Economic Affairs and Climate Policy, The Netherlands)
submitted to Organizational Behavior and Human Decision Processes
Cybersecurity cannot be ensured with mere technical solutions. Hackers often use fraudulent emails to simply ask people for their password to breach into organizations. This technique, called phishing, is a major threat for many organizations. A typical prevention measure is to inform employees but is there a better way to reduce phishing risks? Experience and feedback have often been claimed to be effective in helping people make better decisions. In a large field experiment involving more than 10,000 employees of a Dutch ministry, we tested the effect of information provision and feedback to reduce the risks of falling into a phishing attack. Both approaches substantially reduced the proportion of employees giving away their password. Combining both interventions did not have a larger impact.
WORK IN PROGRESS
Do people let taboo control their perceptions? Evidence from the lab.