Camerer, Colin F. (1989) An Experimental Test of Several Generalized Utility Theories. Journal of Risk and Uncertainty, 2 (1). pp. 61-104. ISSN 0895-5646 http://resolver.caltech.edu/CaltechAUTHORS:20110215-115543010
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There is much evidence that people willingly violate expected utility theory when making choices. Several axiomatic theories have been proposed to explain some of this evidence, but there are few data that discriminate between the theories. To gather such data, an experiment was conducted using pairs of gambles with three levels of outcomes and many combinations of probabilities. Most typical findings were replicated, including the common consequence effect and different risk attitudes for gains and losses. There is evidence of both fanning out and fanning in of indifference curves, and both quasiconcavity and quasiconvexity of preferences. No theory can explain all the data, but prospect theory and the hypothesis that indifference curves fan out can explain most of them.
|Additional Information:||© 1988 Kluwer Academic Publishers. Thanks to Jon Baron, Dan Friedman, Jack Hershey, Chew Soo Hong, John Kagel, Dan Kahneman, Paul Kleindorfer, Marc Knez, Howard Kunreuther, Graham Loomes, Ken MacCrimmon, Mark Machina, Lisabeth Miller, Tom Russell, Rakesh Sarin, Martin Weber, and seminar participants at the University of Chicago Center for Decision Research, the University of Arizona, the NYU Graduate School of Management, and the Economic Science Association. These experiments were funded by the Wharton Risk and Decision Processes Center.|
|Subject Keywords:||expected utility; generalized utility; nonexpected utility; risky choice; Allais paradox|
|Usage Policy:||No commercial reproduction, distribution, display or performance rights in this work are provided.|
|Deposited By:||Tony Diaz|
|Deposited On:||09 Mar 2011 22:28|
|Last Modified:||09 Mar 2011 22:28|
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