Intransitive cycles: Rational choice or random error? An answer based on estimation of error rates with experimental data

Sopher, Barry; Gigliotti, Gary

doi:10.1007/bf01075203

Cited by 79 publications

(53 citation statements)

References 3 publications

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“…In this analysis, it will be assumed that each person responds with his or her true preference with a fixed probability, and otherwise responds with an error. This analysis is similar to that used by Carbone and Hey (2000), Harless and Camerer (1994), Sopher and Gigliotti (1993), Birnbaum (2004b), and others, except that in the present treatment, error probabilities are estimated from preference reversals between replications of the same choices.…”

Section: Error Analysis: Individual Data Patternsmentioning

confidence: 75%

Gain-Loss Separability and Coalescing in Risky Decision Making

Birnbaum

Bahra

2007

Management Science

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T his experiment tested two behavioral properties of risky decision making-gain-loss separability (GLS) and coalescing. Cumulative prospect theory (CPT) implies both properties, but the transfer of attention exchange model (TAX) violates both. Original prospect theory satisfies GLS but may or may not satisfy coalescing, depending on whether editing rules are assumed. A configural form of CPT proposed by Wu and Markle (2004) violates GLS, but satisfies coalescing. New tests were designed and conducted to test these theories against specific predictions of a TAX model. This model used parameters estimated from previous data, together with simple new assumptions to extend TAX to gambles with negative and mixed consequences. Contrary to all three forms of prospect theory, systematic violations of both coalescing and of GLS were observed. Violations of GLS were confirmed by analyses of individual data patterns by means of an error model in which each choice can have a different rate of error. Without estimating any parameters from the new data, the TAX model predicted the majority choices in the new data fairly well, correctly predicting when modal choices would violate GLS, when they would satisfy it, and when indifference would be observed.

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Section: Error Analysis: Individual Data Patternsmentioning

confidence: 75%

Gain-Loss Separability and Coalescing in Risky Decision Making

Birnbaum

Bahra

2007

Management Science

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“…The detail of this approach is different from that used by Sopher and Gigliotti (1993) Johnson and Busemeyer (2005) explored the possibility that Busemeyer and Townsend's (1993) decision field theory might provide an explanation. The key idea is that individuals arrive at a valuation response after a cognitive process of iteration between each bet and some sequence of sure amounts.…”

Section: Imprecise or Probabilistic Preferencesmentioning

confidence: 99%

“…A paper by Loomes et al (1991) reported an experiment where choice cycles in this classic direction did indeed outnumber those in the opposite direction, seemingly to a significant extent. However, only a minority of all responses were cyclical, and it was suggested by Sopher and Gigliotti (1993) that the patterns reported by Loomes et al (1991) could possibly have arisen purely as a result of noise/error. This is an issue to which we shall return in Sections 2.3 and 3.…”

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confidence: 99%

Do Preference Reversals Disappear When We Allow for Probabilistic Choice?

Loomes

Pogrebna

2017

Management Science

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Abstract. The "preference reversal phenomenon," a systematic disparity between people's valuations and choices, poses challenges for theory and policy. Using a very general formulation of probabilistic preferences, we show that the phenomenon is not mainly due to intransitive choice. We find a high degree of regularity within choice tasks and also within valuation tasks, but the two types of tasks appear to evoke very different cognitive processes, even when the experimental environment tries to minimise differences. We discuss possible implications for modelling and eliciting preferences.History: Accepted by Manel Baucells, decision analysis.

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“…1 Some of the reported violations of EU might be at least partly caused by errors instead of being intrinsic violations. Several recent studies conclude that this may indeed be true, see Blavatskyy (2006) for violations of betweenness, Sopher and Gigliotti (1993), Regenwetter and Stober (2006), Schmidt (2008, 2009) for violations of transitivity, and Schmidt and Hey (2004), Butler and Loomes (2007), and Berg, Dickhaut, and Rietz (2009) for preference reversals.…”

Section: Introductionmentioning

confidence: 99%

Testing independence conditions in the presence of errors and splitting effects

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper presents an experimental test of several independence conditions implied by expected utility and alternative models. We perform a repeated choice experiment and fit an error model that allows us to discriminate between true violations of independence and those that can be attributed to errors. In order to investigate the role of event splitting effects, we present each choice problem not only in coalesced form (as in most previous studies) but also in split form. It turns out previously reported violations of independence and splitting effects remain significant even when controlling for errors. Splitting effects have a substantial influence on the tests of independence conditions. When choices are presented in canonical split form, in which probabilities on corresponding probabilityconsequence ranked branches are equal, violations of the independence conditions we tested become either reversed, insignificant or unsystematic. Terms of use: Documents in AbstractThis paper presents an experimental test of several independence conditions implied by expected utility and alternative models. We perform a repeated choice experiment and fit an error model that allows us to discriminate between true violations of independence and those that can be attributed to errors. In order to investigate the role of event splitting effects, we present each choice problem not only in coalesced form (as in most previous studies) but also in split form. It turns out previously reported violations of independence and splitting effects remain significant even when controlling for errors. Splitting effects have a substantial influence on the tests of independence conditions. When choices are presented in canonical split form, in which probabilities on corresponding probability-consequence ranked branches are equal, violations of the independence conditions we tested become either reversed, insignificant or unsystematic.

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Intransitive cycles: Rational choice or random error? An answer based on estimation of error rates with experimental data

Cited by 79 publications

References 3 publications

Gain-Loss Separability and Coalescing in Risky Decision Making

Gain-Loss Separability and Coalescing in Risky Decision Making

Do Preference Reversals Disappear When We Allow for Probabilistic Choice?

Testing independence conditions in the presence of errors and splitting effects

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