Skip to main content
SpringerLink
Log in

Expected utility theory and the experiments

  • Published:
Empirical Economics Aims and scope Submit manuscript

Abstract

The experimental evidence against expected utility theo or unconvincing. When one modifies the experiments to mi tends to support traditional theory.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Allais M (1979) Le comportement de l'homme rationnel devant le risque: Critique des postulats et axiomes de l'Ecole Americaine. Econometrica 21:1953, 503–546; English translation in Allais M, Hagen O (eds) Expected utility hypotheses and the allais paradox

    Google Scholar 

  • Battalio RC, Kagel JH, Jiranyakul K (1990) Testing between alternative models of choice under uncertainty: Some initial results. Journal of Risk and Uncertainty 3:25–50

    Google Scholar 

  • Becker GM, DeGroot MH, Marschak J (1964) Measuring utility by a single-response sequential method. Behavioral Science 9:226–232

    Google Scholar 

  • Berg JE, Daley LA, Dickhaut JW, O'Brien JR (1986) Controlling preferences for lotteries on units of experimental exchange. Quarterly Journal of Economics 101:281–306

    Google Scholar 

  • Camerer CF (1987) Do biases in probability judgement matter in markets? Experimental evidence. American Economic Review 77:981–997

    Google Scholar 

  • Camerer CF (1989) An experimental test of several generalized expected utility theories. Journal of Risk and Uncertainty 2:61–104

    Google Scholar 

  • Chew SH, Waller WS (1986) Empirical tests of weighted utility theory. Journal of Mathematical Psychology 30:55–72

    Google Scholar 

  • Conlisk J (1989) Three variants on the allais example. American Economic Review 79:392–407

    Google Scholar 

  • Conover WJ (1980) Practical nonparametric statistics. New York Wiley, Second Edition

    Google Scholar 

  • Cox JC, Epstein S (1989) Preference reversals without the independence axiom. American Economic Review 79:408–426

    Google Scholar 

  • Davis DD, Holt CA (1993) Experimental economics. Princeton Princeton University Press

    Google Scholar 

  • Duh RR, Sunder S (1986) Incentives, learning, and processing of information in a market environment: An ecaminatio of the base rate fallacy. In: Moriarty S (ed) Laboratory Market Research. Norman OK University of Oklahoma Press.

    Google Scholar 

  • Forsythe R, Palfrey TR, Plott CR (1982) Asset Valuation in an experimental market. Econometrica 50:537–582

    Google Scholar 

  • Grether DM (1980) Bayes rule as a descriptive model: The representativeness heuristic. Quarterly Journal of Economics 95:537–557

    Google Scholar 

  • Grether DM, Plott CR (1979) Economic theory of choice and the preference reversal phenomenon. American Economic Review 69:623–638

    Google Scholar 

  • Grether DM, Plott CR (1982) Economic theory of choice and the preference reversal phenomenon: Reply. American Economic Review 72:575

    Google Scholar 

  • Harrison GW Theory and misbehavior of first-price auctions. American Economic Review 79: 749–762

  • Harrison GW (1992) Theory and misbehavior of first-price auctions: Reply. American Economic Review 82:1426–1443

    Google Scholar 

  • Harrison GW, Morgan PB (1990) Search intensity in experiments. Economic Journal 100:478–486

    Google Scholar 

  • Hey JD, Di Cagno D (1990) Circles and triangles: An experimental estimation of indifference lines in the marschak-machina triangle. Journal of Behavioral Decision Making 3:279–306

    Google Scholar 

  • Holt, CA (1986a) The independence axiom and preference reversals. American Economic Review 76:508–513

    Google Scholar 

  • Holt CA (1986b) Discussant's comments In: Moriarty S (ed.) Laboratory Market Research. Norman OK University of Oklahoma Press

    Google Scholar 

  • Kahneman D, Tversky (1972) Subjective probability: A judgement of representitiveness. Cognitive Psychology 3:430–454

    Google Scholar 

  • Kahneman D, Tversky A (1973) On the psychology of prediction. Psychological Review 84:237–251

    Google Scholar 

  • Kahneman D, Tversky A (1978) Prospect theory: An analysis of decision under risk. Econometrica 47:263–291

    Google Scholar 

  • Karni E, Safra Z (1987) Preference reversals' and the observability of preferences by experimental methods. Econometrica 55:675–685

    Google Scholar 

  • Leamer EE, Leonard HB (1983) Reporting the fragility of regression estimates. Review of Economics and Statistics 65:306–317

    Google Scholar 

  • Loomes G, Sugden R (1983) A rationale for preference reversal. American Economic Review 73: 428–432

    Google Scholar 

  • Machina MJ (1982) Expected utility analysis without the independence axiom. Econometrica 50: 277–323

    Google Scholar 

  • Machina MJ (1987) Choice under uncertainty: Problems solved and unsolved. Journal of Economic Perspectives 1:121–154

    Google Scholar 

  • Mosteller F, Nogee P (1951) An experimental measurement of utility. Journal of Political Economy 59:371–404

    Google Scholar 

  • Peterson CR, Ulehla ZJ (1965) Sequential patterns and maximizing. Journal of Experimental Psychology 69:1–4

    Google Scholar 

  • Plott CR, Sunder S (1982) Efficiency of experimental security markets with insider information: An application of rational-expectations models. Journal of Political Economy 90:663–698

    Google Scholar 

  • Pommerehne WW, Schneider F, Zweifel P, (1982) Economic theory of choice and the preference reversal phenomenon: A reexamination. American Economic Review 72:569–574

    Google Scholar 

  • Press WH, Flannery BP, Teukolsky SA, Vetterling WA (1986) Numerical recipes: The art of scientific computing. Cambridge University Press

  • Reilly RJ (1982) Preference reversal: Further evidence and some suggested modifications in experimental design. American Economic Review 72:576–584

    Google Scholar 

  • Roth AE (1988) Laboratory experimentation in economics: A methodological overview. Economic Journal 89:974–1031

    Google Scholar 

  • Roth AE, Malouf MWK (1979) Game-theoretic models and the role of information in bargaining. Psychological Review 86:574–594

    Google Scholar 

  • Segal U (1988) Does the preference reversal phenomenon necessarily contradict the independence axiom? American Economic Review 78:233–236

    Google Scholar 

  • Starmer C, Sugden R (1991) Does the random-lottery incentive system elicit true preferences? An experimental investigation. American Economic Review 81:971–978

    Google Scholar 

  • Thaler RH (1986) The psychology and economics conference handbook: Comments on simon, on einhorn and hogarth, and on tversky and kahneman. In: Hogarth RM, Reder MW (eds) Rational Choice. Chicago University of Chicago Press

    Google Scholar 

  • Tversky A, Kahneman D (1971) Belief in the law of small numbers. Psychological Bulletin 76: 1105–1110

    Google Scholar 

  • Tversky A, Kahneman D (1973) Availability: A heuristic for judging frequency and probability. Cognitive Psychology 5:207–232

    Google Scholar 

  • Tversky A, Kahneman D (1981) The framing of decisions and the psychology of choice. Science 211:453–458

    Google Scholar 

  • Tversky A, Kahneman D (1983) Extensional versus intutive reasoning: The conjunction fallacy in probability judgement. Psychological Review 90:293–315

    Google Scholar 

  • Tversky A, Kahneman D (1986) Rational choice and the framing of decisions. In: Hogarth RM, Reder MW (eds) Rational Choice. Chicago University of Chicage Press

    Google Scholar 

  • Zeckhauser R (1986) Comments: Behavioral versus rational economics: What you see is what you conquer In: Hogarth RM, Reder MW (eds) Rational Choice. Chicago University of Chicago Press

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, College of Business Administration, University of South Carolina, 29208, Columbia, SC, USA

    Glenn W. Harrison

Authors
  1. Glenn W. Harrison
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

Dewey H. Johnson Professor of Economics, Department of Economics, College of Business Administration, University of South Carolina. I am grateful for comments from seminar participants at the University of Melbourne, University of South Carolina, University of Stockholm, and the University of Western Ontario. John Hey provided a firm, but sympathetic, editorial hand.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Harrison, G.W. Expected utility theory and the experiments. Empirical Economics 19, 223–253 (1994). https://doi.org/10.1007/BF01175873

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF01175873

JEL-Classification System-Numbers

Search

Navigation