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Flipping a coin: Theory and evidence

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  • Dwenger, Nadja
  • Kübler, Dorothea
  • Weizsäcker, Georg

Abstract

We investigate the possibility that a decision-maker prefers to avoid making a decision and instead delegates it to an external device, e.g., a coin flip. In a series of experiments our participants often choose a stochastically dominated lottery between outcomes, contradicting most theories of choice such as expected utility. A large data set on university applications in Germany shows a choice pattern that is consistent with a preference for randomization, entailing substantial allocative consequences. The findings are consistent with our theory of responsibility aversion.

Suggested Citation

  • Dwenger, Nadja & Kübler, Dorothea & Weizsäcker, Georg, 2014. "Flipping a coin: Theory and evidence," Discussion Papers, Research Unit: Market Behavior SP II 2013-201r, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbmbh:spii2013201r
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    References listed on IDEAS

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    Cited by:

    1. Simone Cerreia‐Vioglio & David Dillenberger & Pietro Ortoleva, 2015. "Cautious Expected Utility and the Certainty Effect," Econometrica, Econometric Society, vol. 83, pages 693-728, March.
    2. Dillenberger, David & Segal, Uzi, 2017. "Skewed noise," Journal of Economic Theory, Elsevier, vol. 169(C), pages 344-364.
    3. Dwenger, Nadja & Kübler, Dorothea & Weizsäcker, Georg, 2018. "Flipping a coin: Evidence from university applications," Journal of Public Economics, Elsevier, vol. 167(C), pages 240-250.

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    More about this item

    Keywords

    Stochastic dominance violations; individual decision making; university choice; matching;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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