Common ratio effects should be ruled out if subjects' preferences satisfy compound independence, reduction of compound lotteries, and coalescing. In other words, at least one of these axioms should be violated in order to generate a common ratio effect. Relying on a simple experiment, we...

Preference reversal concerns a systematic divergence between prices of lotteries and subjects' expressed preferences for playing the respective lotteries. This article surveys the discovery of preference reversal by psychologists, its re-examination and corroboration both by psychologists and...