IDEAS home Printed from https://ideas.repec.org/a/kap/theord/v80y2016i4d10.1007_s11238-015-9518-8.html
   My bibliography  Save this article

Consistent inconsistencies? Evidence from decision under risk

Author

Listed:
  • Guillaume Hollard

    () (CNRS)

  • Hela Maafi

    () (Université Paris 8 (Saint-Denis))

  • Jean-Christophe Vergnaud

    () (CNRS)

Abstract

Abstract Conventional economic theory assumes that agents should be consistent across decisions. However, it is often observed that experimental subjects fail to report consistent preferences. So far, these inconsistencies are almost always examined singly. We thus wonder whether the more inconsistent individuals in one task are also more inconsistent in other tasks. We propose an experiment in which subjects are asked to report their preferences over risky bets so as to obtain, for each subject, three measures of inconsistencies: classical preference reversals, framing effects and preference instability. In line with previous experimental findings, subjects are largely inconsistent according to each of these three measures and there are considerable individual differences. The main result is that we find no correlation among these three measures of inconsistency.

Suggested Citation

  • Guillaume Hollard & Hela Maafi & Jean-Christophe Vergnaud, 2016. "Consistent inconsistencies? Evidence from decision under risk," Theory and Decision, Springer, vol. 80(4), pages 623-648, April.
  • Handle: RePEc:kap:theord:v:80:y:2016:i:4:d:10.1007_s11238-015-9518-8
    DOI: 10.1007/s11238-015-9518-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11238-015-9518-8
    File Function: Abstract
    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 below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Loomes, Graham & Moffatt, Peter G & Sugden, Robert, 2002. "A Microeconometric Test of Alternative Stochastic Theories of Risky Choice," Journal of Risk and Uncertainty, Springer, vol. 24(2), pages 103-130, March.
    2. Seidl, Christian, 2002. " Preference Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 16(5), pages 621-655, December.
    3. Berg, Joyce E. & Dickhaut, John W. & Rietz, Thomas A., 2010. "Preference reversals: The impact of truth-revealing monetary incentives," Games and Economic Behavior, Elsevier, vol. 68(2), pages 443-468, March.
    4. John Ameriks & Andrew Caplin & John Leahy, 2003. "Wealth Accumulation and the Propensity to Plan," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 1007-1047.
    5. Ulrich Schmidt & Chris Starmer & Robert Sugden, 2008. "Third-generation prospect theory," Journal of Risk and Uncertainty, Springer, vol. 36(3), pages 203-223, June.
    6. Hey, John D & Orme, Chris, 1994. "Investigating Generalizations of Expected Utility Theory Using Experimental Data," Econometrica, Econometric Society, vol. 62(6), pages 1291-1326, November.
    7. Starmer, Chris & Sugden, Robert, 1989. "Probability and Juxtaposition Effects: An Experimental Investigation of the Common Ratio Effect," Journal of Risk and Uncertainty, Springer, vol. 2(2), pages 159-178, June.
    8. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 41-71.
    9. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
    10. Grether, David M & Plott, Charles R, 1979. "Economic Theory of Choice and the Preference Reversal Phenomenon," American Economic Review, American Economic Association, vol. 69(4), pages 623-638, September.
    11. Camerer, Colin F, 1989. "An Experimental Test of Several Generalized Utility Theories," Journal of Risk and Uncertainty, Springer, vol. 2(1), pages 61-104, April.
    12. Ballinger, T Parker & Wilcox, Nathaniel T, 1997. "Decisions, Error and Heterogeneity," Economic Journal, Royal Economic Society, vol. 107(443), pages 1090-1105, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. repec:spr:joecth:v:65:y:2018:i:3:d:10.1007_s00199-017-1033-4 is not listed on IDEAS

    More about this item

    Keywords

    Heterogeneity; Consistency; Preference reversals; Framing effects;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:theord:v:80:y:2016:i:4:d:10.1007_s11238-015-9518-8. 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). General contact details of provider: http://www.springer.com .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.