ISSN:
1573-7187
Keywords:
Expected utility
;
risk aversion
;
Allais paradox
;
fanning-out
Source:
Springer Online Journal Archives 1860-2000
Topics:
Sociology
,
Economics
Notes:
Abstract In two experiments we test Machina's Hypothesis II (fanning-out). In each experiment we analyze patterns of responses to hypothetical lottery choice questions within a Marschak-Machina triangle. One set of questions involves lotteries on the border of the triangle, an the other set of questions involves lotteries in the interior of the triangle (off the border). Our results show that a large proportion of the observed patterns in the on-border treatment support Hypothesis II, with a considerable amount of fanning-out behavior observed. The patterns observed in the off-border treatment are significantly different from those in the on-border treatment. Hypothesis II performs well in the off-border treatment because expected utility theory itself, which satisfies the restrictions of Hypothesis II, performs well.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01075236
Permalink
