Testing independence conditions in the presence of errors and splitting effects
Michael H. Birnbaum (),
Ulrich Schmidt and
Miriam D. Schneider
Additional contact information
Michael H. Birnbaum: California State University (CSUF)
Miriam D. Schneider: University of Kiel
Journal of Risk and Uncertainty, 2017, vol. 54, issue 1, 61-85
Abstract This paper presents experimental tests of several independence conditions implied by expected utility and alternative models. We perform repeated choice experiments and fit an error model that allows us to discriminate between true violations of independence and those that can be attributed to errors. In order to investigate the role of event splitting effects, we present each choice problem not only in coalesced form (as in many previous studies) but also in split forms. It turns out previously reported violations of independence and splitting effects remain significant even when controlling for errors. However, splitting effects have a substantial influence on tests of independence conditions. When choices are presented in canonical split form, in which probabilities on corresponding probability-consequence ranked branches are equal, violations of the properties tested could be reduced to insignificance or even reversed.
Keywords: Coalescing; Errors; Expected utility; Independence axiom; Prospect theory; Risky decision making; Splitting effects; C91; D81 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11166-017-9251-5 Abstract (text/html)
Access to full text is restricted to subscribers.
Working Paper: Testing independence conditions in the presence of errors and splitting effects (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:jrisku:v:54:y:2017:i:1:d:10.1007_s11166-017-9251-5
Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11166/PS2
Access Statistics for this article
Journal of Risk and Uncertainty is currently edited by W. Kip Viscusi
More articles in Journal of Risk and Uncertainty from Springer
Series data maintained by Sonal Shukla ().