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A shocking experiment: New evidence on probability weighting and common ratio violations

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  • Gregory S. Berns
  • C. Monica Capra
  • Sara Moore
  • Charles Noussair

Abstract

We study whether probability weighting is observed when individuals are presented with a series of choices between lotteries consisting of real non-monetary adverse outcomes, electric shocks. Our estimation of the parameters of the probability weighting function proposed by Tversky and Kahneman (1992) are similar to those obtained in previous studies of lottery choice for negative monetary payoffs and negative hypothetical payoffs. In addition, common ratio violations in choice behavior are widespread. Our results provide evidence that probability weighting is a general phenomenon, independent of the source of disutility.

Suggested Citation

  • Gregory S. Berns & C. Monica Capra & Sara Moore & Charles Noussair, 2007. "A shocking experiment: New evidence on probability weighting and common ratio violations," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 2, pages 234-242, August.
  • Handle: RePEc:jdm:journl:v:2:y:2007:i::p:234-242
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    References listed on IDEAS

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    Cited by:

    1. Krawczyk, Michał Wiktor, 2015. "Probability weighting in different domains: The role of affect, fungibility, and stakes," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 1-15.
    2. A. Peter McGraw & Eldar Shafir & Alexander Todorov, 2010. "Valuing Money and Things: Why a $20 Item Can Be Worth More and Less Than $20," Management Science, INFORMS, pages 816-830.
    3. Müller, Julia & Li, Zhihua & Wakker, Peter P. & Wang, Tong V., 2016. "The Rich Domain of Ambiguity Explored," Annual Conference 2016 (Augsburg): Demographic Change 145734, Verein für Socialpolitik / German Economic Association.
    4. Michał Krawczyk, 2014. "Probability weighting in different domains: the role of stakes, fungibility, and affect," Working Papers 2014-15, Faculty of Economic Sciences, University of Warsaw.
    5. Charles Noussair & Jan Stoop, 2015. "Time as a medium of reward in three social preference experiments," Experimental Economics, Springer;Economic Science Association, pages 442-456.
    6. C. Monica Capra & Bing Jiang & Jan Engelmann & Gregory Berns, 2012. "Can Personality Type Explain Heterogeneity in Probability Distortions?," Emory Economics 1205, Department of Economics, Emory University (Atlanta).
    7. Steven N. Durlauf & Daniel S. Nagin, 2010. "The Deterrent Effect of Imprisonment," NBER Chapters,in: Controlling Crime: Strategies and Tradeoffs, pages 43-94 National Bureau of Economic Research, Inc.
    8. repec:kap:expeco:v:20:y:2017:i:4:d:10.1007_s10683-017-9515-6 is not listed on IDEAS

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