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Empirical tests of stochastic binary choice models

Author

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  • Addison Pan

    (Xi’an Jiaotong-Liverpool University
    Centre for Mathematical Social Science at the University of Auckland)

Abstract

This paper provides an experimental test of stochastic choice models of decisions. Models that admit Fechnerian structure are tested through the repeated pairwise choice problems. Results refute the Fechner hypothesis that characterizing the probability of selecting a given prospect increases in how strongly it is preferred to alternative choices. However, the experimental data lend support to characterizing an individual’s binary choice probability as some scalable functions of the von Neumann–Morgenstern utilities in the risky context.

Suggested Citation

  • Addison Pan, 2022. "Empirical tests of stochastic binary choice models," Theory and Decision, Springer, vol. 93(2), pages 259-280, September.
    • Handle: RePEc:kap:theord:v:93:y:2022:i:2:d:10.1007_s11238-021-09843-y
    DOI: 10.1007/s11238-021-09843-y
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    References listed on IDEAS

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