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An experimental investigation of violations of transitivity in choice under uncertainty

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  • Michael Birnbaum
  • Ulrich Schmidt

Abstract

Several models of choice under uncertainty imply systematic violations of transitivity of preference. Our experiments explored whether people show patterns of intransitivity predicted by these models. To distinguish "true" violations from those produced by "error", a model was fit in which each choice can have a different error rate and each person can have a different pattern of true preferences that does not need to be transitive. Error rate for a choice is estimated from preference reversals between repeated presentations of the same choice. Our results showed that very few people repeated intransitive patterns. We can retain the hypothesis that transitivity best describes the data of the vast majority of participants.
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Suggested Citation

  • Michael Birnbaum & Ulrich Schmidt, 2008. "An experimental investigation of violations of transitivity in choice under uncertainty," Journal of Risk and Uncertainty, Springer, vol. 37(1), pages 77-91, August.
    • Handle: RePEc:kap:jrisku:v:37:y:2008:i:1:p:77-91
    DOI: 10.1007/s11166-008-9043-z
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    More about this item

    Keywords

    Choice; Decision making; Errors; Regret theory; Transitivity; C91; D81;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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