Testing the Effects of Similarity on Risky Choice: Implications for Violations of Expected Utility
 David E. Buschena,
 David Zilberman
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Our aim in this paper was to establish an empirical evaluation for similarity effects modeled by Rubinstein; Azipurua et al.; Leland; and Sileo. These tests are conducted through a sensitivity analysis of two wellknown examples of expected utility (EU) independence violations. We found that subjective similarity reported by respondents was explained very well by objective measures suggested in the similarity literature. The empirical results of this analysis also show that: (1) the likelihood of selection for the riskier choice increases as the pair becomes more similar, (2) these choice patterns are consistent with wellknown independence violations of expected utility, and (3) a significant proportion of individuals exhibit intransitive choice patterns predicted under similarity effects, but not allowed under generalized expected utility models for risky choice.
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 Title
 Testing the Effects of Similarity on Risky Choice: Implications for Violations of Expected Utility
 Journal

Theory and Decision
Volume 46, Issue 3 , pp 253280
 Cover Date
 19990601
 DOI
 10.1023/A:1005066504527
 Print ISSN
 00405833
 Online ISSN
 15737187
 Publisher
 Kluwer Academic Publishers
 Additional Links
 Topics
 Keywords

 Discrete choice probit models
 Expected utility
 Independence violations
 Risk
 Industry Sectors
 Authors

 David E. Buschena ^{(1)}
 David Zilberman ^{(2)}
 Author Affiliations

 1. Department of Agricultural Economics and Economics, Montana State University, Bozeman, MT, 597172920, USA Phone
 2. Department of Agricultural and Resource Economics, University of California, Berkeley, CA, USA.