Theory and Decision

, Volume 71, Issue 2, pp 251–267 | Cite as

The stochastic component in choice and regression to the mean

  • Aurora García-Gallego
  • Nikolaos Georgantzís
  • Daniel Navarro-Martínez
  • Gerardo Sabater-Grande
Article

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.

Keywords

Choice under risk Stochastic component in choice Regression to the mean Multiple-lottery choices 

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Copyright information

© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  • Aurora García-Gallego
    • 1
    • 2
  • Nikolaos Georgantzís
    • 1
  • Daniel Navarro-Martínez
    • 3
  • Gerardo Sabater-Grande
    • 2
  1. 1.GLOBE and Department of EconomicsUniversity of GranadaGranadaSpain
  2. 2.Department of EconomicsUniversity Jaume ICastellón de la PlanaSpain
  3. 3.Department of PsychologyUniversity of WarwickCoventryUK

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