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The Effects of Problem Representation on the Sure-Thing and Substitution Principles

Author

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  • L. Robin Keller

    (Graduate School of Management, University of California, Irvine, California 92717)

Abstract

This paper reports an experimental investigation of the effects of three forms of problem representation on compliance with the Sure-Thing and Substitution Principles. The most common form of representation, written problem statements, was compared with two visual representations: decision matrices with each column proportional in size to the probability of the corresponding event and tubes containing 100 labeled balls. The proportional matrices led to fewer violations of both principles. Moreover, when subjects were trained to construct proportional matrices from written problem statements, they exhibited even fewer violations.

Suggested Citation

  • L. Robin Keller, 1985. "The Effects of Problem Representation on the Sure-Thing and Substitution Principles," Management Science, INFORMS, vol. 31(6), pages 738-751, June.
    • Handle: RePEc:inm:ormnsc:v:31:y:1985:i:6:p:738-751
    DOI: 10.1287/mnsc.31.6.738
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    Citations

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    Cited by:

    1. Jonathan W. Leland & Mark Schneider & Nathaniel T. Wilcox, 2019. "Minimal Frames and Transparent Frames for Risk, Time, and Uncertainty," Management Science, INFORMS, vol. 65(9), pages 4318-4335, September.
    2. Ostermair, Christoph, 2022. "An experimental investigation of the Allais paradox with subjective probabilities and correlated outcomes," Journal of Economic Psychology, Elsevier, vol. 93(C).
    3. Oliver, Adam & Sunstein, Cass, 2019. "Does size matter? The Allais paradox and preference reversals with varying outcome magnitudes," LSE Research Online Documents on Economics 91130, London School of Economics and Political Science, LSE Library.
    4. Butler, D. J., 2000. "Do non-expected utility choice patterns spring from hazy preferences? An experimental study of choice 'errors'," Journal of Economic Behavior & Organization, Elsevier, vol. 41(3), pages 277-297, March.
    5. Birnbaum, Michael H., 2004. "Tests of rank-dependent utility and cumulative prospect theory in gambles represented by natural frequencies: Effects of format, event framing, and branch splitting," Organizational Behavior and Human Decision Processes, Elsevier, vol. 95(1), pages 40-65, September.
    6. Florian H. Schneider & Martin Schonger, 2019. "An Experimental Test of the Anscombe–Aumann Monotonicity Axiom," Management Science, INFORMS, vol. 65(4), pages 1667-1677, April.
    7. Kobi Kriesler & Shmuel Nitzan, 2009. "Framing-based Choice: A Model of Decision-making Under Risk," Korean Economic Review, Korean Economic Association, vol. 25, pages 65-89.
    8. repec:cup:judgdm:v:3:y:2008:i:7:p:528-546 is not listed on IDEAS
    9. Michael H. Birnbaum & Kathleen Johnson & Jay-Lee Longbottom, 2008. "Tests of Cumulative Prospect Theory with graphical displays of probability," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 3(7), pages 528-546, October.
    10. Weber, Elke U., 1989. "A Behavioral Approach To Decision Making Under Uncertainty: Implications And Lessons For Expected Utility Theory," 1989 Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk Meeting, April 9-12, 1989, Sanibel Island, Florida 271520, Regional Research Projects > S-232: Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk.
    11. Daniel Burghart & Paul Glimcher & Stephanie Lazzaro, 2013. "An expected utility maximizer walks into a bar..," Journal of Risk and Uncertainty, Springer, vol. 46(3), pages 215-246, June.
    12. Chris Starmer, 1992. "Testing New Theories of Choice under Uncertainty using the Common Consequence Effect," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(4), pages 813-830.
    13. Birnbaum, Michael H., 2006. "Evidence against prospect theories in gambles with positive, negative, and mixed consequences," Journal of Economic Psychology, Elsevier, vol. 27(6), pages 737-761, December.
    14. Elif Incekara-Hafalir & Eungsik Kim & Jack D. Stecher, 2021. "Is the Allais paradox due to appeal of certainty or aversion to zero?," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 751-771, September.
    15. Oliver, Adam & Sunstein, Cass, 2019. "Does size matter? The Allais paradox and preference reversals with varying outcome magnitudes," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 78(C), pages 45-60.

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