Ever since Allais

Aluma Dembo (), Shachar Kariv, Matthew Polisson and John Quah
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Aluma Dembo: Institute for Fiscal Studies and University of Oxford
Shachar Kariv: Institute for Fiscal Studies

No W21/15, IFS Working Papers from Institute for Fiscal Studies

Abstract: The Allais critique of expected utility theory (EUT) has led to the development of theories of choice under risk that relax the independence axiom, but which adhere to the conventional axioms of ordering and monotonicity. Unlike many existing labora-tory experiments designed to test independence, our experiment systematically tests the entire set of axioms, providing much richer evidence against which EUT can be judged. Our within-subjects analysis is nonparametric, using only information about revealed preference relations in the individual-level data. For most subjects we ?nd that departures from independence are statistically signi?cant but minor relative to departures from ordering and/or monotonicity.

Date: 2021-06-14
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-his and nep-upt
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Citations: View citations in EconPapers (2)

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