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Making Case-Based Decision Theory Directly Observable

Author

Listed:
  • Han Bleichrodt
  • Martin Filko
  • Amit Kothiyal
  • Peter P. Wakker

Abstract

Case-based decision theory (CBDT) provided a new way of revealing preferences, with decisions under uncertainty determined by similarities with cases in memory. This paper introduces a method to measure CBDT that requires no commitment to parametric families and that relates directly to decisions. Thus, CBDT becomes directly observable and can be used in prescriptive applications. Two experiments on real estate investments demonstrate the feasibility of our method. Our implementation of real incentives not only avoids the income effect, but also avoids interactions between different memories. We confirm CBDT's predictions except for one violation of separability of cases in memory.

Suggested Citation

  • Han Bleichrodt & Martin Filko & Amit Kothiyal & Peter P. Wakker, 2017. "Making Case-Based Decision Theory Directly Observable," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 123-151, February.
    • Handle: RePEc:aea:aejmic:v:9:y:2017:i:1:p:123-51
    Note: DOI: 10.1257/mic.20150172
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    References listed on IDEAS

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    Cited by:

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    3. Cheng, Xiu & Long, Ruyin & Chen, Hong, 2020. "A policy utility dislocation model based on prospect theory: A case study of promoting policies with low-carbon lifestyle," Energy Policy, Elsevier, vol. 137(C).
    4. Roxane Bricet, 2018. "Precise versus imprecise datasets: revisiting ambiguity attitudes in the Ellsberg paradox," THEMA Working Papers 2018-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    5. Benjamin Radoc, 2020. "Bandit with similarity information," Department of Economics, Ateneo de Manila University, Working Paper Series 202002, Department of Economics, Ateneo de Manila University.
    6. Gilboa, Itzhak & Minardi, Stefania & Samuelson, Larry, 2020. "Theories and cases in decisions under uncertainty," Games and Economic Behavior, Elsevier, vol. 123(C), pages 22-40.
    7. Ilke Aydogan & Yu Gao, 2020. "Experience and rationality under risk: re-examining the impact of sampling experience," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1100-1128, December.
    8. Benjamin Radoc & Robert Sugden & Theodore L. Turocy, 2019. "Correlation neglect and case-based decisions," Journal of Risk and Uncertainty, Springer, vol. 59(1), pages 23-49, August.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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