Document Type
Discussion Paper
Publication Date
11-1-2007
CFDP Number
1633
CFDP Pages
28
Abstract
Affective decision-making (ADM) is a refutable and predictive theory of individual choice under risk and uncertainty. It generalizes expected utility theory by positing the existence of two cognitive processes — the “rational” and the “emotional” process. Observed choice is the result of their simultaneous interaction. We present a model of affective choice in insurance markets, where risk perceptions are endogenous.
Recommended Citation
Bracha, Anat and Brown, Donald J., "Affective Decision Making: A Behavioral Theory of Choice" (2007). Cowles Foundation Discussion Papers. 1931.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/1931