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Are bygones bygones?

Abstract

This article reports an experiment which tests the principle of separability, i.e. that behaviour in a dynamic choice problem is independent of history and of unreachable eventualities. Although this is a well-known principle of orthodox decision theory and central to conventional economic modelling, it has been questioned on grounds suggested by non-expected utility models of choice under risk and by the psychology of affective influences on risk-taking. Our experimental design, which provides between-subjects tests of separability using three treatments in which the history preceding a decision is manipulated, is inspired by these concerns. We expose separability to a clean and harsh test, but find no evidence that it is violated.

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Correspondence to Robin Cubitt.

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Cubitt, R., Ruiz-Martos, M. & Starmer, C. Are bygones bygones?. Theory Decis 73, 185–202 (2012). https://doi.org/10.1007/s11238-010-9233-4

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  • DOI: https://doi.org/10.1007/s11238-010-9233-4

Keywords

  • Separability
  • History-independence
  • Non-expected utility
  • Risk and affect