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Testing the Random Utility Hypothesis Directly

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  • William J McCausland
  • Clintin Davis-Stober
  • AAJ Marley
  • Sanghyuk Park
  • Nicholas Brown

Abstract

We test a set of inequalities in choice probabilities, shown to be necessary and sufficient for random utility by Falmagne (1978). We run an experiment in which each of 141 participants chooses six times from each doubleton or larger subset of a universe of five lotteries. We compute Bayes factors in favour of random utility, versus an alternative with unrestricted choice probabilities. There is strong evidence that a large majority of participants satisfy random utility; however, there is strong evidence against random utility for four participants. Results are fairly robust to the choice of prior.

Suggested Citation

  • William J McCausland & Clintin Davis-Stober & AAJ Marley & Sanghyuk Park & Nicholas Brown, 2020. "Testing the Random Utility Hypothesis Directly," Economic Journal, Royal Economic Society, vol. 130(625), pages 183-207.
  • Handle: RePEc:oup:econjl:v:130:y:2020:i:625:p:183-207.
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    File URL: http://hdl.handle.net/10.1093/ej/uez039
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    Cited by:

    1. Victor H. Aguiar & Maria Jose Boccardi & Nail Kashaev & Jeongbin Kim, 2018. "Does Random Consideration Explain Behavior when Choice is Hard? Evidence from a Large-scale Experiment," Papers 1812.09619, arXiv.org, revised Jun 2019.

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