TY  - RPRT
        AU  - Gao, Xiaoxue Sherry
AU  - Harrison, Glenn
AU  - Tchernis, Rusty
        TI  - Behavioral Welfare Economics and Risk Preferences: A Bayesian Approach
        PY  - 2020/Aug/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 13580
        UR  - https://www.iza.org/publications/dp13580
        AB  - We propose the use of Bayesian estimation of risk preferences of individuals for applications of behavioral welfare economics to evaluate observed choices that involve risk. Bayesian estimation provides more systematic control of the use of informative priors over inferences about risk preferences for each individual in a sample. We demonstrate that these methods make a difference to the rigorous normative evaluation of decisions in a case study of insurance purchases. We also show that hierarchical Bayesian methods can be used to infer welfare reliably and efficiently even with significantly reduced demands on the number of choices that each subject has to make. Finally, we illustrate the natural use of Bayesian methods in the adaptive evaluation of welfare.
        KW  - behavioral welfare economics
KW  - Bayesian Analysis
KW  - risk preferences
KW  - insurance
        ER  -