IDEAS home Printed from https://ideas.repec.org/p/esi/discus/2004-23.html
   My bibliography  Save this paper

Are preferences incomplete? An experimental study using flexible choices

Author

Listed:
  • Eric Danan
  • Anthony Ziegelmeyer

Abstract

Completeness, the most commonly assumed axiom in preference theory, has not received much attention from the experimental literature. Indeed, incomplete preferences model a cognitive phenomenon (an agent's inability to compare alternatives), and therefore cannot be directly revealed through choice behavior. Implementing a solution to this methodological issue recently proposed by Danan [A behavioral model of individual welfare, mimeo EUREQua University Paris 1, 2003], we build an experimental protocol involving choices among menus of lotteries, and reveal cognitive preferences' incompleteness by means of the concept of preference for flexibility. Our experimental protocol is designed to assess the descriptive validity of the completeness axiom, as well as to relate its possible violations to lotteries' riskiness. Two-thirds of the subjects whose choices reveal preferences in accordance with the underlying theory exhibit a strictly positive measure of incompleteness. The observed average measure of incompleteness equals approximately 17 percent and it is significantly greater than 10 percent. We do not find a significant relationship between a lottery's riskiness and its cognitive comparability with certain payoffs.

Suggested Citation

  • Eric Danan & Anthony Ziegelmeyer, 2004. "Are preferences incomplete? An experimental study using flexible choices," Papers on Strategic Interaction 2004-23, Max Planck Institute of Economics, Strategic Interaction Group.
  • Handle: RePEc:esi:discus:2004-23
    as

    Download full text from publisher

    File URL: ftp://papers.econ.mpg.de/esi/discussionpapers/2004-23.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dubra, Juan & Maccheroni, Fabio & Ok, Efe A., 2004. "Expected utility theory without the completeness axiom," Journal of Economic Theory, Elsevier, vol. 115(1), pages 118-133, March.
    2. Luca Rigotti & Chris Shannon, 2005. "Uncertainty and Risk in Financial Markets," Econometrica, Econometric Society, vol. 73(1), pages 203-243, January.
    3. Estrella, Arturo, 1998. "A New Measure of Fit for Equations with Dichotomous Dependent Variables," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(2), pages 198-205, April.
    4. Fon, Vincy & Otani, Yoshihiko, 1979. "Classical welfare theorems with non-transitive and non-complete preferences," Journal of Economic Theory, Elsevier, vol. 20(3), pages 409-418, June.
    5. repec:bla:econom:v:40:y:1973:i:159:p:241-59 is not listed on IDEAS
    6. Ok, Efe A., 2002. "Utility Representation of an Incomplete Preference Relation," Journal of Economic Theory, Elsevier, vol. 104(2), pages 429-449, June.
    7. Ben Greiner, 2004. "The Online Recruitment System ORSEE - A Guide for the Organization of Experiments in Economics," Papers on Strategic Interaction 2003-10, Max Planck Institute of Economics, Strategic Interaction Group.
    8. Truman F. Bewley, 1986. "Knightian Decision Theory: Part 1," Cowles Foundation Discussion Papers 807, Cowles Foundation for Research in Economics, Yale University.
    9. Eliaz, Kfir & Ok, Efe A., 2006. "Indifference or indecisiveness? Choice-theoretic foundations of incomplete preferences," Games and Economic Behavior, Elsevier, vol. 56(1), pages 61-86, July.
    10. Mas-Colell, Andrew, 1974. "An equilibrium existence theorem without complete or transitive preferences," Journal of Mathematical Economics, Elsevier, vol. 1(3), pages 237-246, December.
    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. Mario Biggeri & Nicolò Bellanca, 2013. "Capabilities and Human Dilemmas: How to Cope with Incompleteness," Working Papers - Economics wp2013_08.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    2. Houy Nicolas, 2008. "Choice Functions with States of Mind," Theory and Decision, Springer, vol. 65(1), pages 1-26, August.
    3. Ani Guerdjikova & Alexander Zimper, 2008. "Flexibility of choice versus reduction of ambiguity," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(3), pages 507-526, April.
    4. Deparis, Stéphane & Mousseau, Vincent & Öztürk, Meltem & Pallier, Christophe & Huron, Caroline, 2012. "When conflict induces the expression of incomplete preferences," European Journal of Operational Research, Elsevier, vol. 221(3), pages 593-602.
    5. Tapki, Ipek Gursel, 2007. "Revealed incomplete preferences under status-quo bias," Mathematical Social Sciences, Elsevier, vol. 53(3), pages 274-283, May.
    6. Matteo Aria & Nicolò Bellanca, 2012. "The Polytheistic Condition: Incomparable Assets and Special Currency," Working Papers - Economics wp2012_20.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gerasímou, Georgios, 2010. "Consumer theory with bounded rational preferences," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 708-714, September.
    2. Leandro Nascimento, 2011. "Remarks on the consumer problem under incomplete preferences," Theory and Decision, Springer, vol. 70(1), pages 95-110, January.
    3. Kraus, Alan & Sagi, Jacob S., 2006. "Inter-temporal preference for flexibility and risky choice," Journal of Mathematical Economics, Elsevier, vol. 42(6), pages 698-709, September.
    4. Hill, Brian, 2016. "Incomplete preferences and confidence," Journal of Mathematical Economics, Elsevier, vol. 65(C), pages 83-103.
    5. Eric Danan, 2010. "Randomization vs. Selection: How to Choose in the Absence of Preference?," Management Science, INFORMS, vol. 56(3), pages 503-518, March.
    6. McCarthy, David & Mikkola, Kalle & Thomas, Teruji, 2021. "Expected utility theory on mixture spaces without the completeness axiom," Journal of Mathematical Economics, Elsevier, vol. 97(C).
    7. Gorno, Leandro & Rivello, Alessandro T., 2023. "A maximum theorem for incomplete preferences," Journal of Mathematical Economics, Elsevier, vol. 106(C).
    8. Lopomo, Giuseppe & Rigotti, Luca & Shannon, Chris, 2022. "Uncertainty and robustness of surplus extraction," Journal of Economic Theory, Elsevier, vol. 199(C).
    9. Evren, Özgür, 2014. "Scalarization methods and expected multi-utility representations," Journal of Economic Theory, Elsevier, vol. 151(C), pages 30-63.
    10. Evren, Özgür & Ok, Efe A., 2011. "On the multi-utility representation of preference relations," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 554-563.
    11. Christopher P Chambers & Federico Echenique, 2021. "Empirical Welfare Economics," Papers 2108.03277, arXiv.org, revised Jun 2024.
    12. Cosimo Munari, 2020. "Multi-utility representations of incomplete preferences induced by set-valued risk measures," Papers 2009.04151, arXiv.org.
    13. Bosi, Gianni & Herden, Gerhard, 2012. "Continuous multi-utility representations of preorders," Journal of Mathematical Economics, Elsevier, vol. 48(4), pages 212-218.
    14. Eric Danan, 2021. "Partial utilitarianism," Working Papers hal-03327900, HAL.
    15. M. Ali Khan & Metin Uyanık, 2021. "Topological connectedness and behavioral assumptions on preferences: a two-way relationship," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(2), pages 411-460, March.
    16. repec:ipg:wpaper:2014-060 is not listed on IDEAS
    17. Karni, Edi & Vierø, Marie-Louise, 2023. "Comparative incompleteness: Measurement, behavioral manifestations and elicitation," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 423-442.
    18. Heller, Yuval, 2012. "Justifiable choice," Games and Economic Behavior, Elsevier, vol. 76(2), pages 375-390.
    19. Pivato, Marcus, 2013. "Multiutility representations for incomplete difference preorders," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 196-220.
    20. Mandler, Michael, 2009. "Indifference and incompleteness distinguished by rational trade," Games and Economic Behavior, Elsevier, vol. 67(1), pages 300-314, September.
    21. Elena Cettolin & Arno Riedl, 2015. "Revealed Incomplete Preferences under Uncertainty," CESifo Working Paper Series 5359, CESifo.

    More about this item

    Keywords

    Incomplete preferences; Preference for fexibility; Experiments;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:esi:discus:2004-23. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Karin Richter (email available below). General contact details of provider: https://edirc.repec.org/data/mpiewde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.