Paying for randomization and indecisiveness

Qiyan Ong () and Jianying Qiu ()
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Qiyan Ong: National University of Singapore, VENTUS
Jianying Qiu: Radboud University

Journal of Risk and Uncertainty, 2023, vol. 67, issue 1, No 3, 45-72

Abstract: Abstract We examine preference for randomization, and link it to conflicting preference-led indecisiveness in social settings. In an ultimatum game experiment where receivers may face conflicting preferences between material gains and equity, we allow receivers to assign non-zero probabilities to both acceptance and rejection (the randomized choice) in addition to the standard binary choice of acceptance or rejection. We further elicit receivers’ willingness to pay for using the randomized choice instead of the binary choice. We find that a theoretical model incorporating receivers’ conflicting preferences explains the experimental results well: most receivers randomized actively between acceptance and rejection, and many were willing to pay for randomization. Our results suggest that allowing people to randomize when making choices with conflicting preferences may improve individual welfare.

Keywords: Indecisiveness; Randomization; Incomplete preference; Preference uncertainty; Imprecision; Conflicting preferences; Ultimatum game (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11166-023-09407-1

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