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Empirical Tests of Intransitivity Predicted by Models of Risky Choice

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  • Birnbaum, Michael H.
  • Schmidt, Ulrich

Abstract

Recently proposed models of risky choice imply systematic violations of transitivity of preference. Five studies explored whether people show patterns of intransitivity predicted by four descriptive 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 need not be transitive. Error rate for a choice is estimated from preference reversals between repeated presentations of the same choice. Results of five studies 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. --

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Bibliographic Info

Paper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2006,10.

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Date of creation: 2006
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Handle: RePEc:zbw:cauewp:5101

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Keywords: decision making; errors; gambling effect; reference points; regret; transitivity;

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