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Consistent inconsistencies? Evidence from decision under risk

Author

Listed:
  • Guillaume Hollard

    (CNRS)

  • Hela Maafi

    (Université Paris 8 (Saint-Denis))

  • Jean-Christophe Vergnaud

    (CNRS)

Abstract

Conventional economic theory assumes that agents should be consistent across decisions. However, it is often observed that experimental subjects fail to report consistent preferences. So far, these inconsistencies are almost always examined singly. We thus wonder whether the more inconsistent individuals in one task are also more inconsistent in other tasks. We propose an experiment in which subjects are asked to report their preferences over risky bets so as to obtain, for each subject, three measures of inconsistencies: classical preference reversals, framing effects and preference instability. In line with previous experimental findings, subjects are largely inconsistent according to each of these three measures and there are considerable individual differences. The main result is that we find no correlation among these three measures of inconsistency.

Suggested Citation

  • Guillaume Hollard & Hela Maafi & Jean-Christophe Vergnaud, 2016. "Consistent inconsistencies? Evidence from decision under risk," Theory and Decision, Springer, vol. 80(4), pages 623-648, April.
    • Handle: RePEc:kap:theord:v:80:y:2016:i:4:d:10.1007_s11238-015-9518-8
    DOI: 10.1007/s11238-015-9518-8
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    References listed on IDEAS

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    Cited by:

    1. Lei Zhou & Nan Liu & Ya-Qiong Liao & Ai-Mei Li, 2021. "Risky choice framing with various problem descriptions: A replication and extension study," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(2), pages 394-421, March.
    2. repec:cup:judgdm:v:16:y:2021:i:2:p:394-421 is not listed on IDEAS
    3. Matthew Ryan, 2018. "Uncertainty and binary stochastic choice," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(3), pages 629-662, May.

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    More about this item

    Keywords

    Heterogeneity; Consistency; Preference reversals; Framing effects;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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