An Empirical Test of Ordinal Independence
In this article, we test Green and Jullien's (1988) Ordinal Independence (OI) Axiom, an axiom necessary for any rank-dependent expected utility (RDEU) model, including Cumulative Prospect Theory (Tversky and Kahneman, 1992). We observe systematic violations of OI (some within-subject violation rates of over 50 percent). These patterns of choice cannot be explained by an RDEU theory alone. We suggest that subjects are employing an editing operation prior to evaluation: if an outcome-probability pair is common to both gambles, it is cancelled when the commonality is transparent; otherwise, it is not cancelled. We interpret the results with respect to both original and cumulative prospect theory and the known empirical properties of the weighting function. Copyright 1994 by Kluwer Academic Publishers
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
When requesting a correction, please mention this item's handle: RePEc:kap:jrisku:v:9:y:1994:i:1:p:39-60. 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: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.