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Robustness of Rank Independence in Risky Choice

Bernheim, B. Douglas and Royer, Rebecca and Sprenger, Charles (2022) Robustness of Rank Independence in Risky Choice. AEA Papers and Proceedings, 112 . pp. 415-420. ISSN 2574-0768. doi:10.1257/pandp.20221090. https://resolver.caltech.edu/CaltechAUTHORS:20220808-886761000

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Abstract

Bernheim and Sprenger (2020) devise and implement a novel test of rank-dependent probability weighting both in general and as formulated in cumulative prospect theory. They reject both hypotheses decisively. Cumulative prospect theory cannot simultaneously account for the rank independence of “equalizing reductions” for three-outcome lotteries, which it construes as indicating linear probability weighting, and the relationship between equalizing reductions and probabilities, which it interprets as indicating highly nonlinear probability weighting. In the current paper, we explore the robustness of the first finding, rank independence of equalizing reductions (and hence of decision weights), with respect to alternative experimental procedures.


Item Type:Article
Related URLs:
URLURL TypeDescription
https://doi.org/10.1257/pandp.20221090DOIArticle
https://www.aeaweb.org/doi/10.1257/pandp.20221090.dsPublisherAuthor Disclosure Statement(s)
Additional Information:© 2022 American Economic Association.
Classification Code:JEL Classification: D44 Auctions; D81 Criteria for Decision-Making under Risk and Uncertainty
DOI:10.1257/pandp.20221090
Record Number:CaltechAUTHORS:20220808-886761000
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20220808-886761000
Official Citation:Bernheim, B. Douglas, Rebecca Royer, and Charles Sprenger. 2022. "Robustness of Rank Independence in Risky Choice." AEA Papers and Proceedings, 112: 415-20. DOI: 10.1257/pandp.20221090
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:116172
Collection:CaltechAUTHORS
Deposited By: George Porter
Deposited On:09 Aug 2022 23:13
Last Modified:09 Aug 2022 23:13

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