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Predictably intransitive preferences

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  • Butler, David J.
  • Pogrebna, Ganna

Abstract

The transitivity axiom is common to nearly all descriptive and normative utility theories of choice under risk. Contrary to both intuition and common assumption, the little-known ’Steinhaus-Trybula paradox’ shows the relation ’stochastically greater than’ will not always be transitive, in contradiction of Weak Stochastic Transitivity. We bespoke-design pairs of lotteries inspired by the paradox, over which individual preferences might cycle. We run an experiment to look for evidence of cycles, and violations of expansion/contraction consistency between choice sets. Even after considering possible stochastic but transitive explanations, we show that cycles can be the modal preference pattern over these simple lotteries, and we find systematic violations of expansion/contraction consistency.

Suggested Citation

  • Butler, David J. & Pogrebna, Ganna, 2018. "Predictably intransitive preferences," Judgment and Decision Making, Cambridge University Press, vol. 13(3), pages 217-236, May.
    • Handle: RePEc:cup:judgdm:v:13:y:2018:i:3:p:217-236_1
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    Cited by:

    1. repec:cup:judgdm:v:15:y:2020:i:6:p:1044-1051 is not listed on IDEAS
    2. Michael H. Birnbaum & Lucy Wan, 2020. "MARTER: Markov True and Error model of drifting parameters," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(1), pages 47-73, January.
    3. Michael H. Birnbaum, 2020. "Reanalysis of Butler and Pogrebna (2018) using true and error model," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(6), pages 1044-1051, November.
    4. Frooman, Jeff, 2021. "Where MLM Intersects MFA: Morally Suspect Goods and the Grounds for Regulatory Action," Business Ethics Quarterly, Cambridge University Press, vol. 31(1), pages 138-161, January.
    5. David Butler, 2020. "Intransitive preferences or choice errors? A reply to Birnbaum," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(6), pages 1052-1053, November.
    6. repec:cup:judgdm:v:15:y:2020:i:6:p:1052-1053 is not listed on IDEAS
    7. repec:cup:judgdm:v:15:y:2020:i:1:p:47-73 is not listed on IDEAS

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