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Evidence of Deliberate Violations of Dominance Due to Secondary Satisfaction - Attraction to Chance

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  • Robin E. Pope

    (Visiting Professor, Department of Economics, The University of Tennessee, Knoxville, Tennessee)

Abstract

This paper concerns the empirical significance of secondary satisfactions - attractions - to chance - and whether 95 successful highly educated people consider that these should influence rational decisions. It analyses their answers to a hypothetical agency decision situation. Over 50% of academics in economics and other decision sciences chose a transparently stochastically dominant act for the sake of their principals' secondary satisfactions. There was not a single participant whose answers unambiguously supported the view that people should always prefer stochastically dominant acts. The findings suggest that focussing biases underlie (i) the exclusion of secondary satisfactions from decision models and (ii) the presumption that violating the stochastic dominance principle is irrational.

Suggested Citation

  • Robin E. Pope, 2001. "Evidence of Deliberate Violations of Dominance Due to Secondary Satisfaction - Attraction to Chance," Homo Oeconomicus, Institute of SocioEconomics, vol. 18, pages 47-76.
    • Handle: RePEc:hom:homoec:v:18:y:2001:p:47-76
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    Citations

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    Cited by:

    1. Pope, Robin & Selten, Reinhard, 2009. "Risk and Expected Utility Theory," Bonn Econ Discussion Papers 5/2009, University of Bonn, Bonn Graduate School of Economics (BGSE).
    2. Pope, Robin & Selten, Reinhard, 2009. "Risk in a Simple Temporal Framework for Expected Utility Theory and for SKAT, the Stages of Knowledge Ahead Theory," Bonn Econ Discussion Papers 27/2009, University of Bonn, Bonn Graduate School of Economics (BGSE).
    3. Kjell Hausken, 2007. "Book Review," Theory and Decision, Springer, vol. 62(3), pages 303-309, May.
    4. Pope, Robin & Selten, Reinhard & Kaiser, Johannes & Kube, Sebastian & von Hagen, Jürgen, 2007. "The damage from clean floats: From an anti-inflationary monetary policy," Bonn Econ Discussion Papers 19/2007, University of Bonn, Bonn Graduate School of Economics (BGSE).
    5. von Hagen, Jürgen & Kube, Sebastian & Kaiser, Johannes & Selten, Reinhard & Pope, Robin, 2006. "Prominent Numbers and Ratios in Exchange Rate Determination: Field and Laboratory Evidence," Bonn Econ Discussion Papers 29/2006, University of Bonn, Bonn Graduate School of Economics (BGSE).
    6. Pope, Robin & Selten, Reinhard & Kube, Sebastian & von Hagen, Jürgen, 2009. "Managed Floats to Damp Shocks like 1982-5 and 2006-9: Field and Laboratory Evidence for Chinese Interest in a Single World Currency," Bonn Econ Discussion Papers 26/2009, University of Bonn, Bonn Graduate School of Economics (BGSE).
    7. Pope, Robin, 2004. "Biases from omitted risk effects in standard gamble utilities," Journal of Health Economics, Elsevier, vol. 23(4), pages 695-735, July.
    8. Duncan Foley, 2017. "Lectures on the Foundations of Applied Statistical Inference," Working Papers 1707, New School for Social Research, Department of Economics.
    9. Robin Pope & Reinhard Selten & Johannes Kaiser & Sebastian Kube & Jürgen Hagen, 2012. "Exchange rate determination: a theory of the decisive role of central bank cooperation and conflict," International Economics and Economic Policy, Springer, vol. 9(1), pages 13-51, March.
    10. Pope, Robin, 2006. "Multiple Periods Destroy the Axiomatic Base of Expected Utility Theory and its Standard Generalisations," Bonn Econ Discussion Papers 30/2006, University of Bonn, Bonn Graduate School of Economics (BGSE).
    11. Pope, Robin & Leitner, Johannes & Leopold-Wildburger, Ulrike, 2009. "Expected utility versus the changes in knowledge ahead," European Journal of Operational Research, Elsevier, vol. 199(3), pages 892-901, December.

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