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Decision Rules in Choice Under Risk

Author

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  • Avner Seror

    (Aix Marseille Univ, CNRS, AMSE, Marseille, France)

Abstract

We study choice among lotteries in which the decision maker chooses from a small library of decision rules. At each menu, the applied rule must make the realized choice a strict improvement under a dominance benchmark on perceived lotteries. We characterize the maximal Herfindahl-Hirschman concentration of rule shares over all locally admissible assignments, and diagnostics that distinguish rules that unify behavior across many menus from rules that mainly act as substitutes. We provide a MIQP formulation, a scalable heuristic, and a finite-sample permutation test of excess concentration relative to a menu-independent random-choice benchmark. Applied to the CPC18 dataset (N= 686 subjects, each making 500-700 repeated binary lottery choices), the mean rule concentration is 0.545, and 64.1% of subjects show excess rule concentration, rejecting menu-independent random choice at the 1% level. Concentration gains are primarily driven by modal-payoff focusing, salience-thinking, and regret-based comparisons.

Suggested Citation

  • Avner Seror, 2026. "Decision Rules in Choice Under Risk," AMSE Working Papers 2602, Aix-Marseille School of Economics, France.
    • Handle: RePEc:aim:wpaimx:2602
    Note: Working paper AMSE 2026-02
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    Keywords

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory

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