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A simple test of expected utility theory using professional traders

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  • Michael Haigh
  • John List

Abstract

We compare behavior across students and professional traders from the Chicago Board of Trade in a classic Allais paradox experiment. Our experiment tests whether independence, a necessary condition in expected utility theory, is systematically violated. We find that both students and professionals exhibit some behavior consistent with the Allais paradox, but the data pattern does suggest that the trader population falls prey to the Allais paradox less frequently than the student population.

Suggested Citation

  • Michael Haigh & John List, 2005. "A simple test of expected utility theory using professional traders," Artefactual Field Experiments 00093, The Field Experiments Website.
    • Handle: RePEc:feb:artefa:00093
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