Title: Substantive and Procedural Rationality in Decisions under
Uncertainty

Speaker: Sachar Kariv, Assistant Professor, Economics, U.C. Berkely

Because uncertainty is endemic in a wide variety of economic
circumstances, models of decision making under uncertainty play a key
role in every field of economics. The talk will review new ways to
generate and analyze data for understanding choice under uncertainty
in the laboratory. In contrast to earlier work, the purpose is not to
uncover violations of particular theories, but rather to provide a
positive account of choice under uncertainty in a rich choice
environment that allows for a general characterization of the patterns
of individual behavior. To characterize an individual's
decision-making under uncertainty, it is necessary to generate many
observations per subject over a wide range of choice sets. An
innovative graphical interface was developed for this purpose, where
subjects see on a computer screen a geometrical representation of
portfolio choice problems. Overall, the data suggest that subjects'
behavior is consistent in the sense that choices "maximize" a
consistent set of preferences. The data also confirm the heterogeneity
of individual behavior and the prevalence of identifiable heuristics
that inform subjects' decision rules.