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Theory and Decision

, Volume 83, Issue 2, pp 195–243 | Cite as

(Sub) Optimality and (non) optimal satisficing in risky decision experiments

  • Daniela Di Cagno
  • Arianna Galliera
  • Werner Güth
  • Francesca Marzo
  • Noemi Pace
Article

Abstract

We implement a risky choice experiment based on one-dimensional choice variables and risk neutrality induced via binary lottery incentives. Each participant confronts many parameter constellations with varying optimal payoffs. We assess (sub)optimality, as well as (non)optimal satisficing by eliciting aspirations in addition to choices. Treatments differ in the probability that a binary random event, which are payoff—but not optimal choice—relevant is experimentally induced and whether participants choose portfolios directly or via satisficing, i.e., by forming aspirations and checking for satisficing before making their choice. By incentivizing aspiration formation, we can test satisficing, and in cases of satisficing, determine whether it is optimal.

Keywords

(un)Bounded rationality Satisficing Risk Uncertainty Experiments 

JEL Classification

D03 D81 C91 

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  • Daniela Di Cagno
    • 1
  • Arianna Galliera
    • 1
  • Werner Güth
    • 1
    • 2
  • Francesca Marzo
    • 1
  • Noemi Pace
    • 3
  1. 1.Luiss UniversityRomeItaly
  2. 2.Max Planck Institute on Collective GoodsBonnGermany
  3. 3.Universitá Ca’ Foscari di VeneziaVeneziaItaly

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