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An Experimental Test of Several Generalized Utility Theories

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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Abstract

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.


Item Type:Article
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http://dx.doi.org/10.1007/BF00055711 DOIUNSPECIFIED
http://www.springerlink.com/content/v66634u053757105/PublisherUNSPECIFIED
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.
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Funding AgencyGrant Number
Wharton Risk and Decision Processes CenterUNSPECIFIED
Subject Keywords:expected utility; generalized utility; nonexpected utility; risky choice; Allais paradox
Record Number:CaltechAUTHORS:20110215-115543010
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20110215-115543010
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:22202
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:09 Mar 2011 22:28
Last Modified:09 Mar 2011 22:28

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