Revealing risky mistakes through revisions

Zachary Breig and Paul Feldman ()
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Paul Feldman: Texas A&M University

Journal of Risk and Uncertainty, 2024, vol. 68, issue 3, No 2, 227-254

Abstract: Abstract We argue that a choice that is modified, absent any informational change, is revealed to have been a mistake. In an experiment, we allow subjects to choose from budgets over binary lotteries. To identify mistakes, which we interpret as deviations from an underlying “true” preference, we allow subjects to revise a subset of their initial choices. The set of revised decisions improves under several standard definitions of optimality. These mistakes are prevalent: subjects modify over 75% of their initial choices when given the chance. Subjects make larger mistakes when inexperienced and when choosing over lotteries with small probabilities of winning.

Keywords: Mistakes; Risk preferences; Uncertainty; Revealed preference; Expected utility; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D81 D91 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11166-024-09429-3

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