IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Testing expected utility in the presence of errors

Author Info

Listed author(s):
  • Ulrich Schmidt
  • Tibor Neugebauer

Abstract

One possible conclusion from recent experimental research on decision making under risk is that observed behaviour can be reasonably accommodated by expected utility plus an error term. This conclusion implies that the violation rate of expected utility should decrease if errors are excluded. This article reports on an experiment which investigates this implication by presenting the same choice problems to subjects three times. The results show that the exclusion of errors leads to a significant reduction of the violation rate for most of the cases. This observation can be regarded as supporting evidence for expected utility plus error term. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

Download Info

If 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.

File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2007.02026.x
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 117 (2007)
Issue (Month): 518 (03)
Pages: 470-485

as
in new window

Handle: RePEc:ecj:econjl:v:117:y:2007:i:518:p:470-485
Contact details of provider: Postal:
2 Dean Trench Street, Westminster, SW1P 3HE

Phone: +44 20 3137 6301
Web page: http://www.res.org.uk/
Email:


More information through EDIRC

Order Information: Web: http://www.blackwellpublishers.co.uk/asp/journal.asp?ref=0013-0133

Keywords:

No references listed on IDEAS
You can help add them by filling out this form.

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as
in new window


Cited by:

  1. von Gaudecker, H.M. & van Soest, A.H.O. & Wengstrom, E., 2008. "Selection and Mode Effects in Risk Preference Elicitation Experiments," Discussion Paper 2008-11, Tilburg University, Center for Economic Research.
  2. Birnbaum, Michael H. & Schmidt, Ulrich, 2010. "Allais paradoxes can be reversed by presenting choices in canonical split form," Kiel Working Papers 1615, Kiel Institute for the World Economy (IfW).
  3. Pavlo Blavatskyy, 2012. "Probabilistic choice and stochastic dominance," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(1), pages 59-83, May.
  4. Hans-Martin Gaudecker & Arthur Soest & Erik Wengström, 2012. "Experts in experiments," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 159-190, October.
  5. Martin G. Kocher & Julius Pahlke & Stefan T. Trautmann, 2013. "Tempus Fugit : Time Pressure in Risky Decisions," Management Science, INFORMS, vol. 59(10), pages 2380-2391, October.
  6. repec:kap:jrisku:v:54:y:2017:i:1:d:10.1007_s11166-017-9251-5 is not listed on IDEAS
  7. Pavlo Blavatskyy, 2014. "Stronger utility," Theory and Decision, Springer, vol. 76(2), pages 265-286, February.
  8. Michael H. Birnbaum & Ulrich Schmidt & Miriam D. Schneider, 2017. "Testing independence conditions in the presence of errors and splitting effects," Journal of Risk and Uncertainty, Springer, vol. 54(1), pages 61-85, February.
  9. Binmore, Ken & Shaked, Avner, 2010. "Experimental economics: Where next?," Journal of Economic Behavior & Organization, Elsevier, vol. 73(1), pages 87-100, January.
  10. Matthew Ryan, 2015. "Binary Choice Probabilities on Mixture Sets," Working Papers 2015-01, Auckland University of Technology, Department of Economics.
  11. Gijs Kuilen & Peter Wakker, 2006. "Learning in the Allais paradox," Journal of Risk and Uncertainty, Springer, vol. 33(3), pages 155-164, December.
  12. Aurora García-Gallego & Nikolaos Georgantzís & Daniel Navarro-Martínez & Gerardo Sabater-Grande, 2011. "The stochastic component in choice and regression to the mean," Theory and Decision, Springer, vol. 71(2), pages 251-267, August.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:117:y:2007:i:518:p:470-485. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.