Abstract
In this lecture, I relate psychological traits to economic preference parameters using well-posed economic choice models, which include risk aversion, time preference, ambiguity aversion, altruism, reciprocity, and other factors. Most previous analyses estimate correlations of preferences and traits, but we account for measurement error in measuring traits. We also account for guessing behaviour and how it is related to traits. We further extend models such as three parameter logit in the item response theory literature. In addition, we account for agent uncertainty about their own preferences at the individual level.
We find that a main channel of influence of IQ and traits on preferences is through aspects of elicitation procedures, not as much through direct function dependence of traits on preference parameters as previous literature suggests. A considerable proportion of previously reported relationships capture the uncertainty agents have about their true preferences and we note that when uncertainty is high agents compensate through guessing effects.
