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Difficult Decisions

Author

Listed:
  • Yoram Halevy
  • David Walker-Jones
  • Lanny Zrill

Abstract

We investigate the problem of identifying incomplete preferences in the domain of uncertainty by proposing an incentive-compatible mechanism that bounds the behavior that can be rationalized by very general classes of complete preferences. Hence, choices that do not abide by the bounds indicate that the decision maker cannot rank the alternatives. Data collected from an experiment that implements the proposed mechanism indicates that when choices cannot be rationalized by Subjective Expected Utility they are usually incompatible with general models of complete preferences. Moreover, behavior that is indicative of incomplete preferences is empirically associated with deliberate randomization.

Suggested Citation

  • Yoram Halevy & David Walker-Jones & Lanny Zrill, 2023. "Difficult Decisions," Working Papers tecipa-753, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-753
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    References listed on IDEAS

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    More about this item

    Keywords

    Incomplete Preferences; Identification; Elicitation; Choice Under Uncertainty; Deliberate Randomization; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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