Preference for randomization: Empirical and experimental evidence
AbstractWe investigate violations of consequentialism in the form of the stochastic dominance property. The property is shared by many theories of choice and implies that the decisionmaker prefers receiving the best outcome for sure over all lotteries that involve multiple outcomes. We run experiments to demonstrate that dominated randomization can be attractive. In treatments where decision-makers are asked to submit multiple decisions without knowing which one is relevant, many participants submit contradictory sets of decisions and thereby induce a dominated lottery between outcomes. Explicit choice of non-consequentialist randomization is observed in a separate treatment. A possible reason for the effect is the desire to avoid having to make the decision. A large data set on (highstake) university applications in Germany shows patterns that are consistent with a preference for randomization. --
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Bibliographic InfoPaper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Behavior with number SP II 2013-201.
Date of creation: 2013
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stochastic dominance violations; individual decision making; university choice; matching;
Other versions of this item:
- Nadja Dwenger & Dorothea Kübler & Georg Weizsäcker, 2013. "Preference for Randomization: Empirical and Experimental Evidence," SFB 649 Discussion Papers SFB649DP2013-004, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-13 (All new papers)
- NEP-CBE-2013-04-13 (Cognitive & Behavioural Economics)
- NEP-EXP-2013-04-13 (Experimental Economics)
- NEP-UPT-2013-04-13 (Utility Models & Prospect Theory)
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