Advanced Search
MyIDEAS: Login to save this article or follow this journal

An experimental investigation of violations of transitivity in choice under uncertainty

Contents:

Author Info

  • 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.

(This abstract was borrowed from another version of this item.)

Download Info

If 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.
File URL: http://hdl.handle.net/10.1007/s11166-008-9043-z
Download Restriction: Access to full text is restricted to subscribers.

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 Info

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

Volume (Year): 37 (2008)
Issue (Month): 1 (August)
Pages: 77-91

as in new window
Handle: RePEc:kap:jrisku:v:37:y:2008:i:1:p:77-91

Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100299

Related research

Keywords: Choice; Decision making; Errors; Regret theory; Transitivity; C91; D81;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Michael Birnbaum & Ulrich Schmidt, 2010. "Testing transitivity in choice under risk," Theory and Decision, Springer, Springer, vol. 69(4), pages 599-614, October.
  2. Pavlo Blavatskyy, 2006. "Axiomatization of a Preference for Most Probable Winner," Theory and Decision, Springer, Springer, vol. 60(1), pages 17-33, 02.
  3. Loomes, Graham & Starmer, Chris & Sugden, Robert, 1989. "Preference Reversal: Information-Processing Effect or Rational Non-transitive Choice?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(395), pages 140-51, Supplemen.
  4. Fishburn, Peter C, 1991. " Nontransitive Preferences in Decision Theory," Journal of Risk and Uncertainty, Springer, Springer, vol. 4(2), pages 113-34, April.
  5. Michael H. Birnbaum, 2005. "Three New Tests of Independence That Differentiate Models of Risky Decision Making," Management Science, INFORMS, INFORMS, vol. 51(9), pages 1346-1358, September.
  6. Chris Starmer, 1999. "Cycling with Rules of Thumb: An Experimental Test for a new form of Non-Transitive Behaviour," Theory and Decision, Springer, Springer, vol. 46(2), pages 139-157, April.
  7. Carbone, Enrica & Hey, John D, 2000. " Which Error Story Is Best?," Journal of Risk and Uncertainty, Springer, Springer, vol. 20(2), pages 161-76, March.
  8. 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.
  9. Humphrey, Steven J, 2001. "Non-Transitive Choice: Event-Splitting Effects or Framing Effects?," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 68(269), pages 77-96, February.
  10. 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.
  11. Schoemaker, Paul J. H. & Hershey, John C., 1992. "Utility measurement: Signal, noise, and bias," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 52(3), pages 397-424, August.
  12. Loomes, Graham & Starmer, Chris & Sugden, Robert, 1991. "Observing Violations of Transitivity by Experimental Methods," Econometrica, Econometric Society, Econometric Society, vol. 59(2), pages 425-39, March.
  13. Starmer, Chris & Sugden, Robert, 1998. "Testing Alternative Explanations of Cyclical Choices," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 65(259), pages 347-61, August.
  14. John Leland, 2010. "Generalized Similarity Judgments: An Alternative Explanation for Choice Anomalies," Levine's Working Paper Archive 7644, David K. Levine.
  15. Bordley, Robert F, 1992. " An Intransitive Expectations-Based Bayesian Variant of Prospect Theory," Journal of Risk and Uncertainty, Springer, Springer, vol. 5(2), pages 127-44, May.
  16. Sugden, Robert, 2003. "Reference-dependent subjective expected utility," Journal of Economic Theory, Elsevier, vol. 111(2), pages 172-191, August.
  17. Loomes, Graham & Taylor, Caron, 1992. "Non-transitive Preferences over Gains and Losses," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 102(411), pages 357-65, March.
  18. Hey, John D & Orme, Chris, 1994. "Investigating Generalizations of Expected Utility Theory Using Experimental Data," Econometrica, Econometric Society, Econometric Society, vol. 62(6), pages 1291-1326, November.
  19. Peter Fishburn, 1980. "A simple model for the utility of gambling," Psychometrika, Springer, Springer, vol. 45(4), pages 435-448, December.
  20. Camerer, Colin F, 1989. " An Experimental Test of Several Generalized Utility Theories," Journal of Risk and Uncertainty, Springer, Springer, vol. 2(1), pages 61-104, April.
  21. Harless, David W & Camerer, Colin F, 1994. "The Predictive Utility of Generalized Expected Utility Theories," Econometrica, Econometric Society, Econometric Society, vol. 62(6), pages 1251-89, November.
  22. Robert Bordley & Gordon B. Hazen, 1991. "SSB and Weighted Linear Utility As Expected Utility with Suspicion," Management Science, INFORMS, INFORMS, vol. 37(4), pages 396-408, April.
  23. Han Bleichrodt & Ulrich Schmidt, 2002. "A Context-Dependent Model of the Gambling Effect," Management Science, INFORMS, INFORMS, vol. 48(6), pages 802-812, June.
  24. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, Econometric Society, vol. 47(2), pages 263-91, March.
  25. Michael Birnbaum, 2005. "A Comparison of Five Models that Predict Violations of First-Order Stochastic Dominance in Risky Decision Making," Journal of Risk and Uncertainty, Springer, Springer, vol. 31(3), pages 263-287, December.
  26. Viscusi, W Kip, 1989. " Prospective Reference Theory: Toward an Explanation of the Paradoxes," Journal of Risk and Uncertainty, Springer, Springer, vol. 2(3), pages 235-63, September.
  27. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 92(368), pages 805-24, December.
  28. Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, Springer, vol. 5(4), pages 297-323, October.
  29. Birnbaum, Michael H & Navarrete, Juan B, 1998. "Testing Descriptive Utility Theories: Violations of Stochastic Dominance and Cumulative Independence," Journal of Risk and Uncertainty, Springer, Springer, vol. 17(1), pages 49-78, October.
  30. Jonathan W. Leland, 1998. "Similarity Judgments in Choice Under Uncertainty: A Reinterpretation of the Predictions of Regret Theory," Management Science, INFORMS, INFORMS, vol. 44(5), pages 659-672, May.
  31. Iverson, G. & Falmagne, J. -C., 1985. "Statistical issues in measurement," Mathematical Social Sciences, Elsevier, Elsevier, vol. 10(2), pages 131-153, October.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Ulrich Schmidt & Michael Stolpe, 2008. "Transitivity in Health Utility Measurement: An Experimental Analysis," Kiel Working Papers 1412, Kiel Institute for the World Economy.
  2. John Hey & Andrea Morone & Ulrich Schmidt, 2009. "Noise and bias in eliciting preferences," Journal of Risk and Uncertainty, Springer, Springer, vol. 39(3), pages 213-235, December.
  3. Amélie Vrijdags, 2010. "An experimental investigation of transitivity in set ranking," Theory and Decision, Springer, Springer, vol. 68(1), pages 213-232, February.
  4. Axel Sonntag, 2013. "Search Costs in Consumer Product Choice: Does Delaying the Provision of Information increase Choice Efficiency?," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 13-05, School of Economics, University of East Anglia, Norwich, UK..
  5. 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.
  6. Amélie Vrijdags, 2013. "Min- and Max-induced rankings: an experimental study," Theory and Decision, Springer, Springer, vol. 75(2), pages 233-266, August.
  7. Yun-shil Cha & Michelle Choi & Ying Guo & Michel Regenwetter & Chris Zwilling, 2013. "Reply: Birnbaum's (2012) statistical tests of independence have unknown Type-I error rates and do not replicate within participant," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(1), pages 55-73, January.
  8. Michael H. Birnbaum, 2013. "True-and-error models violate independence and yet they are testable," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(6), pages 717-737, November.
  9. Michael H. Birnbaum & Jeffrey P. Bahra, 2012. "Testing transitivity of preferences using linked designs," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 7(5), pages 524-567, September.
  10. Michael H. Birnbaum, 2012. "A statistical test of independence in choice data with small samples," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 7(1), pages 97-109, January.
  11. Jean Desrochers & J. Francois Outreville, 2013. "Uncertainty, Ambiguity and Risk Taking: an experimental investigation of consumer behavior and demand for insurance," ICER Working Papers, ICER - International Centre for Economic Research 10-2013, ICER - International Centre for Economic Research.
  12. Michael H. Birnbaum & Jeffrey P. Bahra, 2012. "Separating response variability from structural inconsistency to test models of risky decision making," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 7(4), pages 402-426, July.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:kap:jrisku:v:37:y:2008:i:1:p:77-91. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) 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.