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When Actions Speak Louder Than Prospects

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  • Loomes, Graham

Abstract

Many theories of individual choice under risk and uncertainty are formu lated in terms of preferences over prospects, i.e., probability distr ibutions of consequences. By contrast, regret theory is formulated in terms of actions, i.e., n-tuples of state-contingent consequences. W hat appear from the viewpoint of prospect-based theories to be innocu ous rephrasings of choice problems are predicted by regret theory to cause people to reverse their choices. This paper follows up earlier results with a new kind of experimental test. The new evidence favors regret theory. Copyright 1988 by American Economic Association.

Suggested Citation

  • Loomes, Graham, 1988. "When Actions Speak Louder Than Prospects," American Economic Review, American Economic Association, vol. 78(3), pages 463-470, June.
  • Handle: RePEc:aea:aecrev:v:78:y:1988:i:3:p:463-70
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    Cited by:

    1. Lars Peter Østerdal, 2003. "A note on cost-value analysis," Health Economics, John Wiley & Sons, Ltd., vol. 12(3), pages 247-250.
    2. Han Bleichrodt & Peter P. Wakker, 2015. "Regret Theory: A Bold Alternative to the Alternatives," Economic Journal, Royal Economic Society, vol. 0(583), pages 493-532, March.
    3. Krähmer, Daniel & Stone, Rebecca, 2005. "Regret in Dynamic Decision Problems," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 71, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    4. Battalio, Raymond C & Kagel, John H & Jiranyakul, Komain, 1990. "Testing between Alternative Models of Choice under Uncertainty: Some Initial Results," Journal of Risk and Uncertainty, Springer, vol. 3(1), pages 25-50, March.

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