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Title:An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data PDF Logo
Authors:Morone, Andrea
Schmidt, Ulrich
Issue Date:2006
Series/Report no.:Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2006,08
Abstract:Experimental research on decision making under risk has until now always employed choice data in order to evaluate the empirical performance of expected utility and the alternative nonexpected utility theories. The present paper performs a similar analysis which relies on pricing data instead of choice data. Since pricing data lead in many cases to a different ordering of lotteries than choices (e.g. the preference reversal phenomenon) our analysis may have fundamental different results than preceding investigations. We elicit three different types of pricing data: willingness-to-pay, willingness-to-accept and certainty equivalents under the Becker-DeGroot-Marschak (BDM) incentive mechanism. One of our main result shows that the comparative performance of the single theories differs significantly under these three types of pricing data.
Subjects:expected utility
non-expected utility
experiments
WTP
WTA
BDM
JEL:D81
C91
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Economics Working Papers, Department of Economics, CAU Kiel

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