Non-expected utility maximizers behave as if expected utility maximizers: An experimental test

Hiroshi Kurata, Hiroshi Izawa and Makoto Okamura

The Journal of Socio-Economics, 2009, vol. 38, issue 4, pages 622-629

Abstract: We investigate the behaviors of subjects who either do or do not adhere to the expected utility theory using the Becker-DeGroot-Marschak (BDM) method. We directly examine the validity of the expected utility theory in order to distinguish subjects into two groups: those who adhere to the expected utility theory (expected utility maximizers) and those who do not adhere to it (non-expected utility maximizers), and then execute the BDM experiment in the both groups. We find that the differences in the stated prices between the expected and non-expected utility maximizers are not significant. This result implies practical usefulness for the BDM method.

Keywords: BDM; method; Expected; utility; theory; Reduction; axiom; Certainty; equivalent (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:soceco:v:38:y:2009:i:4:p:622-629

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