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When Actions Speak Louder Than Prospects

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  • Loomes, Graham

Abstract

Many theories of individual choice under risk and uncertainty are formu lated in terms of preferences over prospects, i.e., probability distr ibutions of consequences. By contrast, regret theory is formulated in terms of actions, i.e., n-tuples of state-contingent consequences. W hat appear from the viewpoint of prospect-based theories to be innocu ous rephrasings of choice problems are predicted by regret theory to cause people to reverse their choices. This paper follows up earlier results with a new kind of experimental test. The new evidence favors regret theory. Copyright 1988 by American Economic Association.

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  • Loomes, Graham, 1988. "When Actions Speak Louder Than Prospects," American Economic Review, American Economic Association, vol. 78(3), pages 463-470, June.
    • Handle: RePEc:aea:aecrev:v:78:y:1988:i:3:p:463-70
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    Cited by:

    1. Collier, Trevor & Cotten, Stephen & Roush, Justin, 2022. "Using pandemic behavior to test the external validity of laboratory measurements of risk aversion and guilt," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 101(C).
    2. Enrico Diecidue & Haim Levy & Moshe Levy, 2020. "Probability Dominance," The Review of Economics and Statistics, MIT Press, vol. 102(5), pages 1006-1020, December.
    3. Lars Peter Østerdal, 2003. "A note on cost‐value analysis," Health Economics, John Wiley & Sons, Ltd., vol. 12(3), pages 247-250, March.
    4. James J. Opaluch & Kathleen Segerson, 1988. "Hicksian Welfare Measures within a Regret Theory Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(5), pages 1100-1106.
    5. Andersson, Henrik & Scholtz, Henrik & Zheng, Jiakun, 2023. "Measuring regret theory in the health and financial domain," TSE Working Papers 23-1449, Toulouse School of Economics (TSE).
    6. Iztok Hozo & Benjamin Djulbegovic, 2008. "When Is Diagnostic Testing Inappropriate or Irrational? Acceptable Regret Approach," Medical Decision Making, , vol. 28(4), pages 540-553, July.
    7. Han Bleichrodt & Peter P. Wakker, 2015. "Regret Theory: A Bold Alternative to the Alternatives," Economic Journal, Royal Economic Society, vol. 0(583), pages 493-532, March.
    8. Krähmer, Daniel & Stone, Rebecca, 2005. "Regret in Dynamic Decision Problems," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 71, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    9. Battalio, Raymond C & Kagel, John H & Jiranyakul, Komain, 1990. "Testing between Alternative Models of Choice under Uncertainty: Some Initial Results," Journal of Risk and Uncertainty, Springer, vol. 3(1), pages 25-50, March.

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