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Consciously stochastic in preference reversals

Author

Listed:
  • Liu Shi

    (IMR, Radboud University)

  • Jianying Qiu

    (IMR, Radboud University)

  • Jiangyan Li

    (Dongbei University of Finance and Economics)

  • Frank Bohn

    (IMR, Radboud University
    KOF Swiss Economic Institute)

Abstract

Stochastic choice, the act of choosing differently in repeated decisions, can be a conscious decision made by individuals who are aware of their inability to make a definitive choice. To examine the prevalence and implications of conscious stochastic choice, we developed a novel method and implemented it in a preference reversal experiment: In each valuation choice between the bet and a varying reference option, subjects could either pay a small cost to select a specific option or opt for a free randomization choice where a computer randomly selects an option. Our findings revealed that the majority of subjects exhibited conscious stochastic choice, and further that their choices were significantly affected by the elicitation procedures.

Suggested Citation

  • Liu Shi & Jianying Qiu & Jiangyan Li & Frank Bohn, 2024. "Consciously stochastic in preference reversals," Journal of Risk and Uncertainty, Springer, vol. 68(3), pages 255-297, June.
    • Handle: RePEc:kap:jrisku:v:68:y:2024:i:3:d:10.1007_s11166-024-09430-w
    DOI: 10.1007/s11166-024-09430-w
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    More about this item

    Keywords

    Stochastic choice; procedure invariance; preference reversals; incomplete preferences; imprecise preferences; deliberately stochastic;
    All these keywords.

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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