Approximate Expected Utility Rationalization

Federico Echenique, Kota Saito and Taisuke Imai

Papers from arXiv.org

Abstract: We propose a new measure of deviations from expected utility theory. For any positive number~$e$, we give a characterization of the datasets with a rationalization that is within~$e$ (in beliefs, utility, or perceived prices) of expected utility theory. The number~$e$ can then be used as a measure of how far the data is to expected utility theory. We apply our methodology to data from three large-scale experiments. Many subjects in those experiments are consistent with utility maximization, but not with expected utility maximization. Our measure of distance to expected utility is correlated with subjects' demographic characteristics.

Date: 2021-02
New Economics Papers: this item is included in nep-evo and nep-upt
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Citations: View citations in EconPapers (2)

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http://arxiv.org/pdf/2102.06331 Latest version (application/pdf)

Related works:
Journal Article: Approximate Expected Utility Rationalization (2023)
Working Paper: Approximate Expected Utility Rationalization (2023)
Working Paper: Approximate Expected Utility Rationalization (2018)
Working Paper: Approximate Expected Utility Rationalization (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2102.06331

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