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Regret Aversion or Event-Splitting Effects? More Evidence under Risk and Uncertainty

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  • Humphrey, Steven J
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    Abstract

    Recent experimental evidence has concluded that experimentally observed juxtaposition effects, as predicted by regret theory, are largely attributable to "event-splitting effects" (ESEs) whereby the subjective decision weight attached to an outcome depends on the number of, as well as on the combined probability of, the disjoint events in which that outcome occurs. An experiment is reported that discriminates between juxtaposition effects and ESEs under conditions of both complete and incomplete information. The results confirm that juxtaposition effects are indeed largely due to ESEs and are robust over different informational conditions. Copyright 1995 by Kluwer Academic Publishers

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Risk and Uncertainty.

    Volume (Year): 11 (1995)
    Issue (Month): 3 (December)
    Pages: 263-74

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    Handle: RePEc:kap:jrisku:v:11:y:1995:i:3:p:263-74

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    Cited by:
    1. Birnbaum, Michael H., 2006. "Evidence against prospect theories in gambles with positive, negative, and mixed consequences," Journal of Economic Psychology, Elsevier, Elsevier, vol. 27(6), pages 737-761, December.
    2. Birnbaum, Michael H. & Patton, Jamie N. & Lott, Melissa K., 1999. "Evidence against Rank-Dependent Utility Theories: Tests of Cumulative Independence, Interval Independence, Stochastic Dominance, and Transitivity, , , ," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 77(1), pages 44-83, January.
    3. Birnbaum, Michael H., 2007. "Tests of branch splitting and branch-splitting independence in Allais paradoxes with positive and mixed consequences," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 102(2), pages 154-173, March.
    4. 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, Elsevier, vol. 95(1), pages 40-65, September.
    5. 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.
    6. Humphrey, Steven J., 1996. "Do anchoring effects underlie event-splitting effects? An experimental test," Economics Letters, Elsevier, vol. 51(3), pages 303-308, June.
    7. Aurélien Baillon & Han Bleichrodt & Alessandra Cillo, 2013. "A Tailor-Made Test of Intransitive Choice," Working Papers 496, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    8. Andr� C. R. Martins, 2006. "Probability biases as Bayesian inference," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 1, pages 108-117, November.
    9. Ian J. Bateman & Michael P. Cameron & Antreas Tsoumas, 2006. "Investigating the Characteristics of Stated Preferences for Reducing the Impacts of Air Pollution: A Contingent Valuation Experiment," Working Papers in Economics, University of Waikato, Department of Economics 06/08, University of Waikato, Department of Economics.
    10. Gürtler, Marc & Stolpe, Julia, 2011. "Piecewise continuous cumulative prospect theory and behavioral financial engineering," Working Papers IF37V1, Technische Universität Braunschweig, Institute of Finance.
    11. Abbas Mirakhor & S. Nuri Erbas, 2007. "The Equity Premium Puzzle, Ambiguity Aversion, and Institutional Quality," IMF Working Papers 07/230, International Monetary Fund.
    12. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
    13. Steven Humphrey, 1999. "Probability Learning, Event-Splitting Effects and the Economic Theory of Choice," Theory and Decision, Springer, Springer, vol. 46(1), pages 51-78, February.
    14. Reb, Jochen, 2008. "Regret aversion and decision process quality: Effects of regret salience on decision process carefulness," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 105(2), pages 169-182, March.
    15. Brown, Gordon D. A. & Gardner, Jonathan & Oswald, Andrew J. & Qian, Jing, 2005. "Does Wage Rank Affect Employees' Wellbeing?," IZA Discussion Papers 1505, Institute for the Study of Labor (IZA).
    16. Michael H. Birnbaum & Jeffrey P. Bahra, 2007. "Gain-Loss Separability and Coalescing in Risky Decision Making," Management Science, INFORMS, INFORMS, vol. 53(6), pages 1016-1028, June.
    17. Steven J Humphrey & Luke Lindsay & Chris Starmer, 2012. "Consumption experience, choice experience and the endowment effect," Discussion Papers, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham 2012-16, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

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