Papers by Michele Bernasconi
We study the effect of the fiscal burden on tax evasion. We develop a model of tax evasion decisi... more We study the effect of the fiscal burden on tax evasion. We develop a model of tax evasion decision introducing two ideas from the behavioral economics: 1) the idea of reference dependence with hedonic adaptation; and 2) the notion that individuals may pursue ethical behaviors in addition to self-interest. The model produces some strong results in regards to the effect of the tax rates on tax evasion. We distinguish between short run and long run effects. In the short run, we find that contrary to the classical expected utility ...
We study various methods of aggregating individual judgments and individual priorities in group d... more We study various methods of aggregating individual judgments and individual priorities in group decision making with the AHP. The focus is on the empirical properties of the various methods, mainly on the extent to which the various aggregation methods represent an accurate approximation of the priority vector of interest. We identify five main classes of aggregation procedures which provide identical or very similar empirical expressions for the vectors of interest. We also propose a method to decompose in the AHP response matrix distortions due to random errors and perturbations caused by cognitive biases predicted by the mathematical psychology literature. We test the decomposition with experimental data and find that perturbations in group decision making caused by cognitive distortions are more important than those caused by random errors. We propose methods to correct the systematic distortions.
The Analytic Hierarchy Process (AHP) ratio-scaling approach is re-examined in view of the recent ... more The Analytic Hierarchy Process (AHP) ratio-scaling approach is re-examined in view of the recent developments in mathematical psychology based on the so-called separable representations. The study highlights the distortions in the estimates based on the maximum eigenvalue method used in the AHP distinguishing the contributions due to random noises from the effects due to the nonlinearity of the subjective weighting function of separable representations. The analysis is based on the second order expansion of the Perron eigenvector and Perron eigenvalue in reciprocally symmetric matrices with perturbations. The asymptotic distributions of the Perron eigenvector and Perron eigenvalue are derived and related to the eigenvalue-based index of cardinal consistency used in the AHP. The results show the limits of using the latter index as a rule to assess the quality of the estimates of a ratio scale. The AHP method to estimate the ratio scales is compared with the classical ratio magnitude approach used in psychophysics.
Studying how individuals compare two given quantitative stimuli, say d1 and d2, is a fundamental ... more Studying how individuals compare two given quantitative stimuli, say d1 and d2, is a fundamental problem. One very common way to address it is through ratio estimation, that is to ask individuals not to give values to d1 and d2, but rather to give their estimates of the ratio p=d1/d2. Several psychophysical theories (the best known being Stevens’ power-law) claim that this ratio cannot be known directly and that there are cognitive distortions on the apprehension of the different quantities. These theories result in the so-called separable representations [Luce, R. D. (2002). A psychophysical theory of intensity proportions, joint presentations, and matches. Psychological Review, 109, 520–532; Narens, L. (1996). A theory of ratio magnitude estimation. Journal of Mathematical Psychology, 40, 109–788], which include Stevens’ model as a special case. In this paper we propose a general statistical framework that allows for testing in a rigorous way whether the separable representation theory is grounded or not. We conclude in favor of it, but reject Stevens’ model. As a byproduct, we provide estimates of the psychophysical functions of interest.
The analytic hierarchy process (AHP) is a decision-making procedure widely used in management for... more The analytic hierarchy process (AHP) is a decision-making procedure widely used in management for establishing priorities in multicriteria decision problems. Underlying the AHP is the theory of ratio-scale measures developed in psychophysics since the middle of the last century. It is, however, well known that classical ratio-scaling approaches have several problems. We reconsider the AHP in the light of the modern theory of measurement based on the so-called separable representations recently axiomatized in mathematical psychology. We provide various theoretical and empirical results on the extent to which the AHP can be considered a reliable decision-making procedure in terms of the modern theory of subjective measurement.
We study the effects of the tax burden on tax evasion both theoretically and experimentally. We d... more We study the effects of the tax burden on tax evasion both theoretically and experimentally. We develop a theoretical framework of tax evasion decisions that is based on two behavioral assumptions: (1) taxpayers are endowed with reference dependent preferences that are subject to hedonic adaptation and (2) in making their choices, taxpayers are affected by ethical concerns. The model generates new predictions on how a change in the tax rate affects the decision to evade taxes. Contrary to the classical expected utility theory, but in line with previous applications of reference dependent preferences to taxpayers’ decisions, an increase in the tax rate increases tax evasion. Moreover, as taxpayers adapt to the new legal tax rate, the decision to evade taxes becomes independent of the tax rate. We present results from a laboratory experiment that support the main predictions of the model.
The variable frame theory of focal points: An experimental study
Games and Economic Behavior, Jan 1, 1997
In variable frame theory a game is played rationally, but which game gets played is determined by... more In variable frame theory a game is played rationally, but which game gets played is determined by nonrational (eg, perceptual) player characteristics. These determine their "frames"-the sets of attributes of the objects of choice they think about. The theory implies that it is rational ...
Journal of Public Economics, Jan 1, 1998
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Papers by Michele Bernasconi