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Axiom of Monotonicity: An Experimental Test

Author

Listed:
  • Tridib Sharma

    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

  • Radovan Vadovic

    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

Abstract

The Axiom of Monotonicity (AM) is a necessary condition for a number of expected utility representations, including those obtained by de Finetti (1930), von Neumann and Morgenstern (1944) and Savage (1954). The paper reports on experiments that directly test AM by eliminating strategic uncertainty, context, and peer effects. In this sterile and simple environment we do not observe AM violations under uncertainty but we do observe violations under ambiguity.

Suggested Citation

  • Tridib Sharma & Radovan Vadovic, 2010. "Axiom of Monotonicity: An Experimental Test," Working Papers 1003, Centro de Investigacion Economica, ITAM, revised 2011.
    • Handle: RePEc:cie:wpaper:1003
    as

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    File URL: http://ftp.itam.mx/pub/academico/inves/vadovic/10-03.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Monotonicity; Dominance; Disjunction Effect; Sure THing Principle;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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