Nonlinear Preferences and Two-Stage Lotteries: Theories and Evidence
AbstractNonlinear preferences models are theories for choice under risk which have weakened in one way or another the Independence Axiom of Expected Utility. In this paper we present an experiment designed to discriminate between some basic ideas in this literature. We tested the Betweenness axiom, a weaker form of Independence, against an alternative which predicts that indifference curves in the probabilities simplex are convex along the lower edge and concave along the hypotenuse. We also checked whether preferences among single-stage lotteries, as those revealed by our test of Betweenness, should be extended to preferences among two-stage lottery via the classical Reduction of Compound Lottery axiom or via the Certainty Equivalent Mechanism. Copyright 1994 by Royal Economic Society.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 104 (1994)
Issue (Month): 422 (January)
Contact details of provider:
Postal: Office of the Secretary-General, School of Economics and Finance, University of St. Andrews, St. Andrews, Fife, KY16 9AL, UK
Phone: +44 1334 462479
Web page: http://www.res.org.uk/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Blavatskyy, Pavlo R., 2006. "Violations of betweenness or random errors?," Economics Letters, Elsevier, vol. 91(1), pages 34-38, April.
- Astrid Hopfensitz & Frans Winden, 2008.
"Dynamic Choice, Independence and Emotions,"
Theory and Decision,
Springer, vol. 64(2), pages 249-300, March.
- Astrid Hopfensitz & Frans van Winden, 2007. "Dynamic Choice, Independence and Emotions," CESifo Working Paper Series 1949, CESifo Group Munich.
- Astrid Hopfensitz & Frans van Winden, 2006. "Dynamic Choice, Independence and Emotions," Tinbergen Institute Discussion Papers 06-087/1, Tinbergen Institute.
- Hopfensitz, Astrid & van Winden, Frans A.A.M., 2007. "Dynamic Choice, Independence, and Emotions," CEPR Discussion Papers 6038, C.E.P.R. Discussion Papers.
- Simone Cerreia-Vioglio & David Dillenberger & Pietro ortoleva, 2013.
"Cautious Expected Utility and the Certainty Effect,"
488, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Simone Cerreia-Vioglio & David Dillenberger & Pietro Ortoleva, 2014. "Cautious Expected Utility and the Certainty Effect," PIER Working Paper Archive 14-005, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Simone Cerreia-Vioglio & David Dillenberger & Pietro Ortoleva, 2013. "Cautious Expected Utility and the Certainty Effect," PIER Working Paper Archive 13-037, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Pavlo R. Blavatskyy, . "Axiomatization of a Preference for Most Probable Winner," IEW - Working Papers 230, Institute for Empirical Research in Economics - University of Zurich.
- Michele Bernasconi, 2002. "How should income be divided? questionnaire evidence from the theory of “Impartial preferences”," Journal of Economics, Springer, vol. 9(1), pages 163-195, December.
- Nathalie Etchart, 2002.
"Adequate Moods for non-eu Decision Making in a Sequential Framework,"
Theory and Decision,
Springer, vol. 52(1), pages 1-28, February.
- Nathalie Etchart-Vincent, 2002. "Adequate Moods for non-EU Decision Making in a Sequential Framework," Post-Print halshs-00004830, HAL.
- Bruno S. Frey, .
"Knight Fever towards an Economics of Awards,"
IEW - Working Papers
239, Institute for Empirical Research in Economics - University of Zurich.
- Liang Zou, 2006. "An Alternative to Prospect Theory," Annals of Economics and Finance, Society for AEF, vol. 7(1), pages 1-28, May.
- Robin Cubitt & Chris Starmer & Robert Sugden, 1998. "On the Validity of the Random Lottery Incentive System," Experimental Economics, Springer, vol. 1(2), pages 115-131, September.
- Amit Kothiyal & Vitalie Spinu & Peter Wakker, 2014. "An experimental test of prospect theory for predicting choice under ambiguity," Journal of Risk and Uncertainty, Springer, vol. 48(1), pages 1-17, February.
- repec:hal:ciredw:halshs-00004832 is not listed on IDEAS
- Pavlo Blavatskyy, 2004. "Axiomatization of a Preference for Most Probably Winner," CERGE-EI Working Papers wp226, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- repec:dgr:uvatin:2006087 is not listed on IDEAS
- Pavlo R. Blavatskyy, . "A Stochastic Expected Utility Theory," IEW - Working Papers 231, Institute for Empirical Research in Economics - University of Zurich.
- Pavlo Blavatskyy, 2007. "Stochastic expected utility theory," Journal of Risk and Uncertainty, Springer, vol. 34(3), pages 259-286, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.