Strength of preference and decisions under risk

Carlos Alós-Ferrer and Michele Garagnani

No 330, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: Influential economic approaches as random utility models assume a monotonic relation between choice frequencies and “strength of preference,” in line with widespread evidence from the cognitive sciences, which also document an inverse relation to response times. However, for economic decisions under risk, these effects are largely untested, because models used to fit data assume them. Further, the dimension underlying strength of preference remains unclear in economics, with candidates including payoff-irrelevant numerical magnitudes. We provide a systematic, out-of-sample empirical validation of these relations (both for choices and response times) relying on both a new experimental design and simulations.

Keywords: Stochastic choice; strength of preference; decision errors; risk attitude (search for similar items in EconPapers)
JEL-codes: D01 D81 D91 (search for similar items in EconPapers)
Date: 2019-07, Revised 2022-02
New Economics Papers: this item is included in nep-exp and nep-upt
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Citations: View citations in EconPapers (5)

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Journal Article: Strength of preference and decisions under risk (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:330

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