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Are preferences complete? An experimental measurement of indecisiveness under risk

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Author Info
Eric Danan ()
Anthony Ziegelmeyer ()

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Abstract

We propose an experimental design allowing a behavioral test of the axiom of completeness of individual preferences. The central feature of our design consists in enabling subjects to postpone commitment at a small cost. Our main result is that preferences are significantly incomplete. We use lotteries as choice alternatives and we find that risk aversion is globally robust to preference incompleteness.

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Publisher Info
Paper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2006-01.

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Length: 43 pages
Date of creation: Aug 2006
Date of revision:
Handle: RePEc:esi:discus:2006-01

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Related research
Keywords: Incomplete preferences; preference for flexibility; risk aversion; indecisiveness; indifference;

Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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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.:
  1. Beattie, Jane & Loomes, Graham, 1997. "The Impact of Incentives upon Risky Choice Experiments," Journal of Risk and Uncertainty, Springer, vol. 14(2), pages 155-68, March. [Downloadable!] (restricted)
  2. Arlegi, Ricardo & Nieto, Jorge, 2001. "Incomplete preferences and the preference for flexibility," Mathematical Social Sciences, Elsevier, vol. 41(2), pages 151-165, March. [Downloadable!] (restricted)
  3. Sen, Amartya, 1988. "Freedom of choice : Concept and content," European Economic Review, Elsevier, vol. 32(2-3), pages 269-294, March. [Downloadable!] (restricted)
  4. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December. [Downloadable!]
  5. Dubra, Juan & Maccheroni, Fabio & Ok, Efe A., 2004. "Expected utility theory without the completeness axiom," Journal of Economic Theory, Elsevier, vol. 115(1), pages 118-133, March. [Downloadable!] (restricted)
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  6. Robin Cubitt & Chris Starmer & Robert Sugden, 1998. "On the Validity of the Random Lottery Incentive System," Experimental Economics, Springer, vol. 1(2), pages 115-131, September. [Downloadable!] (restricted)
  7. Dekel, Eddie & Lipman, Barton L & Rustichini, Aldo, 2001. "Representing Preferences with a Unique Subjective State Space," Econometrica, Econometric Society, vol. 69(4), pages 891-934, July.
    Other versions:
  8. Eliaz, Kfir & Ok, Efe A., 2006. "Indifference or indecisiveness? Choice-theoretic foundations of incomplete preferences," Games and Economic Behavior, Elsevier, vol. 56(1), pages 61-86, July. [Downloadable!] (restricted)
  9. Dhar, Ravi, 1997. " Consumer Preference for a No-Choice Option," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 24(2), pages 215-31, September.
  10. Luca Rigotti & Chris Shannon, 2005. "Uncertainty and Risk in Financial Markets," Econometrica, Econometric Society, vol. 73(1), pages 203-243, 01. [Downloadable!] (restricted)
    Other versions:
  11. Starmer, Chris & Sugden, Robert, 1991. "Does the Random-Lottery Incentive System Elicit True Preferences? An Experimental Investigation," American Economic Review, American Economic Association, vol. 81(4), pages 971-78, September. [Downloadable!] (restricted)
  12. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany. [Downloadable!]
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