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Non-transitive Preferences over Gains and Losses

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  • Loomes, Graham
  • Taylor, Caron

Abstract

Although transitivity is often regarded as an indispensable principle of rational choice under uncertainty, some decision models allow nontransitive preferences. One of these--regret theory--is consistent with a particular pattern of choice cycles when payoffs are nonnegative and the opposite pattern of cycles when payoffs are nonpositive. This paper presents evidence from an experiment designed to test these implications of regret theory. Copyright 1992 by Royal Economic Society.

Suggested Citation

  • Loomes, Graham & Taylor, Caron, 1992. "Non-transitive Preferences over Gains and Losses," Economic Journal, Royal Economic Society, vol. 102(411), pages 357-365, March.
    • Handle: RePEc:ecj:econjl:v:102:y:1992:i:411:p:357-65
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    References listed on IDEAS

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    1. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-824, December.
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    Cited by:

    1. Birnbaum, Michael H. & Gutierrez, Roman J., 2007. "Testing for intransitivity of preferences predicted by a lexicographic semi-order," Organizational Behavior and Human Decision Processes, Elsevier, vol. 104(1), pages 96-112, September.
    2. Smith, Richard David, 1996. "Is Regret Theory an alternative basis for estimating the value of healthcare interventions?," Health Policy, Elsevier, vol. 37(2), pages 105-115, August.
    3. Yves Balasko & Mich Tvede, 2010. "General equilibrium without utility functions: how far to go?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 45(1), pages 201-225, October.
    4. Graham Loomes, 2005. "Modelling the Stochastic Component of Behaviour in Experiments: Some Issues for the Interpretation of Data," Experimental Economics, Springer;Economic Science Association, vol. 8(4), pages 301-323, December.
    5. Enrico Diecidue & Haim Levy & Moshe Levy, 2020. "Probability Dominance," The Review of Economics and Statistics, MIT Press, vol. 102(5), pages 1006-1020, December.
    6. Thomas Demuynck, 2014. "The computational complexity of rationalizing Pareto optimal choice behavior," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(3), pages 529-549, March.
    7. Na Young Park, 2018. "OCD and Errors in Financial Decisions," Economics Bulletin, AccessEcon, vol. 38(4), pages 1970-1977.
    8. Alexia Gaudeul, 2009. "A (Micro) Course in Microeconomic Theory for MSc Students," Working Papers id:1986, eSocialSciences.
    9. Michael Birnbaum & Ulrich Schmidt, 2010. "Testing transitivity in choice under risk," Theory and Decision, Springer, vol. 69(4), pages 599-614, October.
    10. Michael Birnbaum & Ulrich Schmidt, 2008. "An experimental investigation of violations of transitivity in choice under uncertainty," Journal of Risk and Uncertainty, Springer, vol. 37(1), pages 77-91, August.
    11. Demuynck, Thomas, 2011. "The computational complexity of rationalizing boundedly rational choice behavior," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 425-433.
    12. Birnbaum, Michael H. & Schmidt, Ulrich, 2006. "Empirical Tests of Intransitivity Predicted by Models of Risky Choice," Economics Working Papers 2006-10, Christian-Albrechts-University of Kiel, Department of Economics.
    13. Mario Le Glatin & Pascal Le Masson & Benoit Weil, 2018. "Can organisational ambidexterity kill innovation? A case for non-expected utility decision making," Post-Print hal-01808566, HAL.
    14. Brett Day & Graham Loomes, 2010. "Conflicting violations of transitivity and where they may lead us," Theory and Decision, Springer, vol. 68(1), pages 233-242, February.
    15. Martin Binder, 2009. "Some Considerations Regarding the Problem of Multidimensional Utility," Jena Economics Research Papers 2009-099, Friedrich-Schiller-University Jena.
    16. Ulrich Schmidt & Michael Stolpe, 2011. "Transitivity in health utility measurement: An experimental analysis," Health Economics Review, Springer, vol. 1(1), pages 1-4, December.
    17. Gowdy, John M., 2004. "Altruism, evolution, and welfare economics," Journal of Economic Behavior & Organization, Elsevier, vol. 53(1), pages 69-73, January.
    18. 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.

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