García-Gallego, Aurora, Georgantzís, N. (Nikolaos), Navarro-Martínez, Daniel and Sabater-Grande, Gerardo. (2011) The stochastic component in choice and regression to the mean. Theory and Decision, Vol.71 (No.2). pp. 251-267. ISSN 0040-5833

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Abstract

In this article, we illustrate experimentally an important consequence of the stochastic component in choice behaviour which has not been acknowledged so far. Namely, its potential to produce 'regression to the mean' (RTM) effects. We employ a novel approach to individual choice under risk, based on repeated multiple-lottery choices (i.e. choices among many lotteries), to show how the high degree of stochastic variability present in individual decisions can distort crucially certain results through RTM effects. We demonstrate the point in the context of a social comparison experiment.

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Item Type:	Journal Article
Subjects:	B Philosophy. Psychology. Religion > BF Psychology Q Science > QA Mathematics
Divisions:	Faculty of Science > Psychology
Library of Congress Subject Headings (LCSH):	Choice (Psychology), Regression analysis, Stochastic analysis, Stochastic processes, Decision making, Decision making -- Mathematical models
Journal or Publication Title:	Theory and Decision
Publisher:	Springer Netherlands
ISSN:	0040-5833
Date:	2011
Volume:	Vol.71
Number:	No.2
Page Range:	pp. 251-267
Identification Number:	10.1007/s11238-010-9223-6
Status:	Peer Reviewed
Publication Status:	Published
Funder:	Spain. Ministerio de Ciencia e Innovación (MCINN), Fundación Bancaja (Spain), Andalusia (Spain)
Grant number:	ECO2008-04636/ECON (MCINN), P1 1B2007-14 (FB), P07-SEJ-03155 (Andalusia)
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URI:	http://wrap.warwick.ac.uk/id/eprint/38766

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