Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110857
Authors: 
Cettolin, Elena
Riedl, Arno
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5359
Abstract: 
The completeness axiom of choice has been questioned for long, and in response, theoretical models of decision making allowing for incomplete preferences have been developed. So far the theoretical accomplishments have however not been paired with empirical evidence on the actual existence of incomplete preferences. In this paper we provide empirical evidence in support of the existence of incomplete preferences due to multiple priors over an ambiguous event. We design experimental decision tasks where specific choice patterns are consistent with incomplete preferences under uncertainty but inconsistent with models assuming complete preferences. We find that approximately half of the subjects behave consistent with incomplete preferences due to multiple priors and that the observed behavioral pattern cannot be attributed to mistakes, probability weighting or regret aversion. In a robustness test we show that the observed behavior is robust to a prize variation in the ambiguous prospect and consistent with comparative statics predictions based on incomplete preferences under uncertainty.
Subjects: 
incomplete preferences
uncertainty
multiple priors
experiment
JEL: 
C91
D01
D81
Document Type: 
Working Paper

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