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The results of a new experimental study reveal highly systematic violations of expected utility theory. The pattern of these violations is exactly the opposite of the classical common ratio effect discovered by Allais (1953). Two recent decision theories— stochastic expected utility theory...
Persistent link: https://www.econbiz.de/10008625739
coalescing, the assumption that when two branches lead to the same consequence, they can be combined by adding their …
Persistent link: https://www.econbiz.de/10010278006
This paper presents an experimental test of several independence conditions implied by expected utility and alternative models. We perform a repeated choice experiment and fit an error model that allows us to discriminate between true violations of independence and those that can be attributed...
Persistent link: https://www.econbiz.de/10010278007
This paper presents an experimental test of several independence conditions implied by expected utility and alternative models. We perform a repeated choice experiment and fit an error model that allows us to discriminate between true violations of independence and those that can be attributed...
Persistent link: https://www.econbiz.de/10008631614
coalescing, the assumption that when two branches lead to the same consequence, they can be combined by adding their …
Persistent link: https://www.econbiz.de/10008631616
functionals from round to round. Instead, we focus on choice problems allowing for direct tests of independence and coalescing. We … show that variability of responses as well as violations of independence and coalescing decrease from earlier to later …
Persistent link: https://www.econbiz.de/10010486756
We study search behavior in a generalized "secretary problem" environment in which consumers search sequentially for the best alternative from a known and finite set of multi-attribute alternatives. In contrast to most previous studies, we make no distributional assumptions about the quality of...
Persistent link: https://www.econbiz.de/10005408222
In the framework of expected utility theory, risk attitudes are entirely capturedby the curvature of the utility function. In cumulative prospect theory (CPT) riskattitudes have an additional dimension: the weighting of probabilities. With thismodication, one question arises naturally: since...
Persistent link: https://www.econbiz.de/10005866427
The study investigates protective responses in low probability and high loss risk situations.Particularly, it (1) detects individual protection valuations to variations in probability versus tovariations in loss for payment decisions and choice decisions, (2) elicits the thresholdprobability in...
Persistent link: https://www.econbiz.de/10005866644
In a cascade experiment subjects are confronted with artificial predecessors prdecting in line with the BHW model (Bikhchandandi, Hirshleifer and Welch, 1992). Using the BDM mechanism we study subjects' probability assignments based on price limits for participating in the prediction game. We...
Persistent link: https://www.econbiz.de/10005866980