An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data

Andrea Morone and Ulrich Schmidt

Economics Bulletin, 2008, vol. 4, issue 20, 1-12

Abstract: Experimental research on decision making under risk has until now always employed choice data in order to evaluate the empirical performance of expected utility and the alternative non-expected utility theories. The present paper performs a similar analysis which relies on pricing data instead of choice data. Since pricing data lead in many cases to a different ordering of lotteries than choices (e.g. the preference reversal phenomenon) our analysis may have fundamental different results than preceding investigations. We elicit three different types of pricing data: willingness-to-pay, willingness-to-accept and certainty equivalents under the Becker-DeGroot-Marschak (BDM) incentive mechanism. One of our main result shows that the comparative performance of the single theories differs significantly under these three types of pricing data.

Keywords: experiments (search for similar items in EconPapers)
JEL-codes: C9 D8 (search for similar items in EconPapers)
Date: 2008-06-27
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data (2006)
Working Paper: An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data (2005)
Working Paper: An Experimental Investigation of Alternatives to Expected Utility Using Pricing Data (2003)
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