An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data
AbstractExperimental research on decision making under risk has until now always employed choice data in order to evaluate the empirical performance of expected utility and the alternative non-expected utility theories. The present paper performs a similar analysis which relies on pricing data instead of choice data. Since pricing data lead in many cases to a different ordering of lotteries than choices (e.g. the preference reversal phenomenon) our analysis may have fundamental different results than preceding investigations. We elicit three different types of pricing data: willingness-to-pay, willingness-to-accept and certainty equivalents under the Becker-DeGroot-Marschak (BDM) incentive mechanism. One of our main result shows that the comparative performance of the single theories differs significantly under these three types of pricing data.
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Bibliographic InfoPaper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2005-28.
Length: 16 pages
Date of creation: Nov 2005
Date of revision:
Other versions of this item:
- Andrea Morone & Ulrich Schmidt, 2008. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Economics Bulletin, AccessEcon, vol. 4(20), pages 1-12.
- Morone, Andrea & Schmidt, Ulrich, 2003. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Diskussionspapiere der Wirtschaftswissenschaftlichen FakultÃÂ¤t der Leibniz UniversitÃÂ¤t Hannover dp-280, Leibniz UniversitÃ¤t Hannover, Wirtschaftswissenschaftliche FakultÃ¤t.
- Morone, Andrea & Schmidt, Ulrich, 2006. "An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data," Economics Working Papers 2006,08, Christian-Albrechts-University of Kiel, Department of Economics.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-20 (All new papers)
- NEP-DCM-2005-12-09 (Discrete Choice Models)
- NEP-EXP-2005-11-20 (Experimental Economics)
- NEP-UPT-2005-11-19 (Utility Models & Prospect Theory)
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.:
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