Empirical Tests of Intransitivity Predicted by Models of Risky Choice
AbstractRecently 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. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2006,10.
Date of creation: 2006
Date of revision:
decision making; errors; gambling effect; reference points; regret; transitivity;
Find related papers by JEL classification:
- 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:
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.:
- Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
- Loomes, Graham & Starmer, Chris & Sugden, Robert, 1991. "Observing Violations of Transitivity by Experimental Methods," Econometrica, Econometric Society, vol. 59(2), pages 425-39, March.
- Harless, David W & Camerer, Colin F, 1994. "The Predictive Utility of Generalized Expected Utility Theories," Econometrica, Econometric Society, vol. 62(6), pages 1251-89, November.
- Iverson, G. & Falmagne, J. -C., 1985. "Statistical issues in measurement," Mathematical Social Sciences, Elsevier, vol. 10(2), pages 131-153, October.
- Sugden, Robert, 2003. "Reference-dependent subjective expected utility," Journal of Economic Theory, Elsevier, vol. 111(2), pages 172-191, August.
- Fishburn, Peter C, 1991. " Nontransitive Preferences in Decision Theory," Journal of Risk and Uncertainty, Springer, vol. 4(2), pages 113-34, April.
- Hey, John D & Orme, Chris, 1994. "Investigating Generalizations of Expected Utility Theory Using Experimental Data," Econometrica, Econometric Society, vol. 62(6), pages 1291-1326, November.
- Starmer, Chris & Sugden, Robert, 1998. "Testing Alternative Explanations of Cyclical Choices," Economica, London School of Economics and Political Science, vol. 65(259), pages 347-61, August.
- Viscusi, W Kip, 1989. " Prospective Reference Theory: Toward an Explanation of the Paradoxes," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 235-63, September.
- Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
- Loomes, Graham & Starmer, Chris & Sugden, Robert, 1989. "Preference Reversal: Information-Processing Effect or Rational Non-transitive Choice?," Economic Journal, Royal Economic Society, vol. 99(395), pages 140-51, Supplemen.
- Carbone, Enrica & Hey, John D, 2000. " Which Error Story Is Best?," Journal of Risk and Uncertainty, Springer, vol. 20(2), pages 161-76, March.
- Loomes, Graham & Taylor, Caron, 1992. "Non-transitive Preferences over Gains and Losses," Economic Journal, Royal Economic Society, vol. 102(411), pages 357-65, March.
- Jonathan W. Leland, 1998. "Similarity Judgments in Choice Under Uncertainty: A Reinterpretation of the Predictions of Regret Theory," Management Science, INFORMS, vol. 44(5), pages 659-672, May.
- Leland, Jonathan W, 1994.
"Generalized Similarity Judgments: An Alternative Explanation for Choice Anomalies,"
Journal of Risk and Uncertainty,
Springer, vol. 9(2), pages 151-72, October.
- John Leland, 2010. "Generalized Similarity Judgments: An Alternative Explanation for Choice Anomalies," Levine's Working Paper Archive 7644, David K. Levine.
- Bordley, Robert F, 1992. " An Intransitive Expectations-Based Bayesian Variant of Prospect Theory," Journal of Risk and Uncertainty, Springer, vol. 5(2), pages 127-44, May.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Humphrey, Steven J, 2001. "Non-Transitive Choice: Event-Splitting Effects or Framing Effects?," Economica, London School of Economics and Political Science, vol. 68(269), pages 77-96, February.
- Han Bleichrodt & Ulrich Schmidt, 2002. "A Context-Dependent Model of the Gambling Effect," Management Science, INFORMS, vol. 48(6), pages 802-812, June.
- Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-24, December.
- Chris Starmer, 1999. "Cycling with Rules of Thumb: An Experimental Test for a new form of Non-Transitive Behaviour," Theory and Decision, Springer, vol. 46(2), pages 139-157, April.
- Michael Birnbaum, 2005. "A Comparison of Five Models that Predict Violations of First-Order Stochastic Dominance in Risky Decision Making," Journal of Risk and Uncertainty, Springer, vol. 31(3), pages 263-287, December.
- Robert Bordley & Gordon B. Hazen, 1991. "SSB and Weighted Linear Utility As Expected Utility with Suspicion," Management Science, INFORMS, vol. 37(4), pages 396-408, April.
- Schoemaker, Paul J. H. & Hershey, John C., 1992. "Utility measurement: Signal, noise, and bias," Organizational Behavior and Human Decision Processes, Elsevier, vol. 52(3), pages 397-424, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.