Indifference or indecisiveness: a strict discrimination

Jianying Qiu and Qiyan Ong

MPRA Paper from University Library of Munich, Germany

Abstract: Abstract We develop a new approach to directly and strictly distinguish indecisiveness from indifference. In our approach experimental subjects face a list of pairs of options. Besides the standard choice of choosing one option out of the pair (the binary choice), we also allow experimental subjects to randomize over the two options by choosing probabilities according to which either option determines the payoffs (the randomized choice). Furthermore, we elicit subjects' willingness to pay (WTP) of using the randomized choice via a modified multiple price list method. We show that subjects might strictly prefer the randomized choice over the binary choice when they are indecisive. Our results suggest that (1) the vast majority of subjects randomized actively; (2) subjects took longer time to make strictly randomized decisions; (3) subjects were willing to pay a strictly positive amount of money to randomize, and they were willing to pay more for randomized choices with randomizing probabilities close to 0.5 than those with randomizing probabilities close to 0 or 1. These results provide strong evidence for the existence of indecisiveness in choices. More importantly, it suggests that there might exist significant welfare losses when indecisive individuals are forced to make all-or-nothing decisions against their potentially incomplete preferences.

Keywords: indecisiveness; indifference; experiment; randomized choices (search for similar items in EconPapers)
JEL-codes: C9 C91 D81 (search for similar items in EconPapers)
Date: 2017-05-01, Revised 2017-09-18
New Economics Papers: this item is included in nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Indifference or indecisiveness: a strict discrimination (2017)
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