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Are Contingent Choices Consistent?

Author

Listed:
  • Banerjee, Priyodorshi
  • Das, Tanmoy

Abstract

A contingent plan is consistent if the specification for any particular contingency in the plan is invariant to the set of alternative contingencies or, equivalently, is independent of irrelevant information emerging from alternative contingencies or choice problems. Our experiments show that consistency may be obtainable when choice problems are complete, with monetary and immediate outcomes, but is likely to face violation in more complex settings. We further found that decisions are more likely to change when irrelevant information arises rather than subsides, and that any observed failure of consistency has the use of irrelevant information in decision-making at its core.

Suggested Citation

  • Banerjee, Priyodorshi & Das, Tanmoy, 2015. "Are Contingent Choices Consistent?," MPRA Paper 66995, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66995
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    References listed on IDEAS

    as
    1. Edward J. Green & Kent Osband, 1991. "A Revealed Preference Theory for Expected Utility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(4), pages 677-695.
    2. Zambrano, Eduardo, 2005. "Testable implications of subjective expected utility theory," Games and Economic Behavior, Elsevier, vol. 53(2), pages 262-268, November.
    3. Green, Edward J. & Park, In-Uck, 1996. "Bayes contingent plans," Journal of Economic Behavior & Organization, Elsevier, vol. 31(2), pages 225-236, November.
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    Keywords

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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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