Decision Rules in Choice Under Risk

Avner Seror
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Avner Seror: Aix Marseille Univ, CNRS, AMSE, Marseille, France

No 2602, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: We study choice among lotteries in which the decision maker chooses from a small library of decision rules. At each menu, the applied rule must make the realized choice a strict improvement under a dominance benchmark on perceived lotteries. We characterize the maximal Herfindahl-Hirschman concentration of rule shares over all locally admissible assignments, and diagnostics that distinguish rules that unify behavior across many menus from rules that mainly act as substitutes. We provide a MIQP formulation, a scalable heuristic, and a finite-sample permutation test of excess concentration relative to a menu-independent random-choice benchmark. Applied to the CPC18 dataset (N= 686 subjects, each making 500-700 repeated binary lottery choices), the mean rule concentration is 0.545, and 64.1% of subjects show excess rule concentration, rejecting menu-independent random choice at the 1% level. Concentration gains are primarily driven by modal-payoff focusing, salience-thinking, and regret-based comparisons.

Keywords: Behavioral Economics; Decision Theory; Revealed Preference (search for similar items in EconPapers)
JEL-codes: C44 D81 D91 (search for similar items in EconPapers)
Date: 2026-01-01
Note: Working paper AMSE 2026-02
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