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The Becker-DeGroot-Marschak mechanism and nonexpected utility : a testable approach
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Safra, Zvi, Segal, U. (Uzi) and Spivak, Avia (1990) The Becker-DeGroot-Marschak mechanism and nonexpected utility : a testable approach. Journal of Risk and Uncertainty, 3 (2). pp. 177-190. doi:10.1007/BF00056371 ISSN 0895-5646.
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Official URL: http://dx.doi.org/10.1007/BF00056371
Abstract
The Becker-DeGroot-Marschak mechanism is widely used to elicit decision makers' selling prices of lotteries. This mechanism leads, however, to the preference reversal phenomenon, which seemed to indicate nontransitive preferences. To solve this puzzle, Karni and Safra (1987) introduced a new interpretation of this mechanism based on two-stage lotteries without the independence axiom. In this article, we suggest a set of empirically testable hypotheses based on their interpretation of the mechanism. One of these tests can be used to find the utility and the probability transformation functions of an anticipated utility maximizer.
Item Type: | Journal Article | ||||
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Subjects: | Q Science > QA Mathematics | ||||
Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Utility theory | ||||
Journal or Publication Title: | Journal of Risk and Uncertainty | ||||
Publisher: | Springer New York LLC | ||||
ISSN: | 0895-5646 | ||||
Official Date: | 1990 | ||||
Dates: |
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Volume: | 3 | ||||
Number: | 2 | ||||
Number of Pages: | 14 | ||||
Page Range: | pp. 177-190 | ||||
DOI: | 10.1007/BF00056371 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access |
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