Testing the Transivity Explanation of the Allais Paradox
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Testing the Transivity Explanation of the Allais Paradox. / Groes, Ebbe; Jacobsen, Hans Jørgen; Sloth, Birgitte; Tranæs, Torben.
I: Theory and Decision, Bind 47, Nr. 3, 1999, s. 229-245.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Testing the Transivity Explanation of the Allais Paradox
AU - Groes, Ebbe
AU - Jacobsen, Hans Jørgen
AU - Sloth, Birgitte
AU - Tranæs, Torben
N1 - JEL Classification: D8, D8
PY - 1999
Y1 - 1999
N2 - This paper uses a two-dimensional version of a standard common consequence experiment to test the intransitivity explanation of Allais-paradox-type violations of expected utility theory. We compare the common consequence effect of two choice problems differing only with respect to whether alternatives are statistically correlated or independent. We framed the experiment so that intransitive preferences could explain violating behavior when alternatives are independent, but not when they are correlated. We found the same pattern of violation in the two cases. This is evidence against intransitivity as an explanation of the Allais Paradox. The question whether violations of expected utility are mainly due to intransitivity or to violation of independence is important since it is exactly on this issue the main new decision theories differ
AB - This paper uses a two-dimensional version of a standard common consequence experiment to test the intransitivity explanation of Allais-paradox-type violations of expected utility theory. We compare the common consequence effect of two choice problems differing only with respect to whether alternatives are statistically correlated or independent. We framed the experiment so that intransitive preferences could explain violating behavior when alternatives are independent, but not when they are correlated. We found the same pattern of violation in the two cases. This is evidence against intransitivity as an explanation of the Allais Paradox. The question whether violations of expected utility are mainly due to intransitivity or to violation of independence is important since it is exactly on this issue the main new decision theories differ
U2 - 10.1023/A:1005177230444
DO - 10.1023/A:1005177230444
M3 - Journal article
VL - 47
SP - 229
EP - 245
JO - Theory and Decision
JF - Theory and Decision
SN - 0040-5833
IS - 3
ER -
ID: 152365