(Sub) Optimality and (non) optimal satisficing in risky decision experiments

Daniela Di Cagno, Arianna Galliera, Werner Güth (), Francesca Marzo () and Noemi Pace
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Werner Güth: Luiss University
Francesca Marzo: Luiss University

Theory and Decision, 2017, vol. 83, issue 2, No 3, 195-243

Abstract: Abstract We implement a risky choice experiment based on one-dimensional choice variables and risk neutrality induced via binary lottery incentives. Each participant confronts many parameter constellations with varying optimal payoffs. We assess (sub)optimality, as well as (non)optimal satisficing by eliciting aspirations in addition to choices. Treatments differ in the probability that a binary random event, which are payoff—but not optimal choice—relevant is experimentally induced and whether participants choose portfolios directly or via satisficing, i.e., by forming aspirations and checking for satisficing before making their choice. By incentivizing aspiration formation, we can test satisficing, and in cases of satisficing, determine whether it is optimal.

Keywords: (un)Bounded rationality; Satisficing; Risk; Uncertainty; Experiments (search for similar items in EconPapers)
JEL-codes: C91 D03 D81 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: (Sub) Optimality and (Non) Optimal Satisficing in Risky Decision Experiments (2016)
Working Paper: (Sub) Optimality and (Non) Optimal Satisficing in Risky Decision Experiments (2016)
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DOI: 10.1007/s11238-017-9591-2

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