Robustness of Rank Independence in Risky Choice

B. Douglas Bernheim, Rebecca Royer and Charles Sprenger

AEA Papers and Proceedings, 2022, vol. 112, 415-20

Abstract: Bernheim and Sprenger (2020) devise and implement a novel test of rank-dependent probability weighting both in general and as formulated in cumulative prospect theory. They reject both hypotheses decisively. Cumulative prospect theory cannot simultaneously account for the rank independence of "equalizing reductions" for three-outcome lotteries, which it construes as indicating linear probability weighting, and the relationship between equalizing reductions and probabilities, which it interprets as indicating highly nonlinear probability weighting. In the current paper, we explore the robustness of the first finding, rank independence of equalizing reductions (and hence of decision weights), with respect to alternative experimental procedures.

JEL-codes: D44 D81 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pandp.20221090 (application/pdf)
https://www.aeaweb.org/doi/10.1257/pandp.20221090.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:apandp:v:112:y:2022:p:415-20

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/subscribe.html

DOI: 10.1257/pandp.20221090

Access Statistics for this article

AEA Papers and Proceedings is currently edited by William Johnson and Kelly Markel

More articles in AEA Papers and Proceedings from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().