(Sub) Optimality and (Non) Optimal Satisficing in Risky Decision Experiments

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

No 3/2016, Working Papers CESARE from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: A risky choice experiment is 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, partly 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: 2016-10
New Economics Papers: this item is included in nep-exp and nep-upt
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Related works:
Journal Article: (Sub) Optimality and (non) optimal satisficing in risky decision experiments (2017)
Working Paper: (Sub) Optimality and (Non) Optimal Satisficing in Risky Decision Experiments (2016)
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