Violations of dominance in decision-making

Thomas Kourouxous () and Thomas Bauer ()
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Thomas Kourouxous: University of Paderborn

Business Research, 2019, vol. 12, issue 1, No 10, 209-239

Abstract: Abstract A key premise underlying most of the economic literature is that rational decision-makers will choose dominant strategies over dominated alternatives. However, prior literature in various disciplines including business, psychology, and economics document a series of phenomena associated with violations of the dominance principle in decision-making. In this comprehensive review, we discuss conditions under which people violate the dominance principle in decision-making. When presenting violations of dominance in empirical and experimental studies, we differentiate between absolute, statewise, and stochastic (first- and second-order) violations of dominance. Furthermore, we categorize the literature by the leading causes for dominance violations: framing, reference points, certainty effects, bounded rationality, and emotional responses.

Keywords: Decision theory; Absolute dominance; Statewise dominance; First-order stochastic dominance; Second-order stochastic dominance (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s40685-019-0093-7

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