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Risky Decision Making: Testing for Violations of Transitivity Predicted by an Editing Mechanism

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  • Birnbaum, Michael H.
  • Navarro-Martinez, Daniel
  • Ungemach, Christoph
  • Stewart, Neil
  • Quispe-Torreblanca, Edika G.

Abstract

Transitivity is the assumption that if a person prefers A to B and B to C, then that person should prefer A to C. This article explores a paradigm in which Birnbaum, Patton and Lott (1999) thought people might be systematically intransitive. Many undergraduates choose C = ($96, .85; $90, .05; $12, .10) over A = ($96, .9; $14, .05; $12, .05), violating dominance. Perhaps people would detect dominance in simpler choices, such as A versus B = ($96, .9; $12, .10) and B versus C, and yet continue to violate it in the choice between A and C, which would violate transitivity. In this study we apply a true and error model to test intransitive preferences predicted by a partially effective editing mechanism. The results replicated previous findings quite well; however, the true and error model indicated that very few, if any, participants exhibited true intransitive preferences. In addition, violations of stochastic dominance showed a strong and systematic decrease in prevalence over time and violated response independence, thus violating key assumptions of standard random preference models for analysis of transitivity.

Suggested Citation

  • Birnbaum, Michael H. & Navarro-Martinez, Daniel & Ungemach, Christoph & Stewart, Neil & Quispe-Torreblanca, Edika G., 2016. "Risky Decision Making: Testing for Violations of Transitivity Predicted by an Editing Mechanism," Judgment and Decision Making, Cambridge University Press, vol. 11(1), pages 75-91, January.
    • Handle: RePEc:cup:judgdm:v:11:y:2016:i:1:p:75-91_7
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