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Testing the Random Utility Hypothesis Directly

Author

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  • William J McCausland
  • Clintin Davis-Stober
  • AAJ Marley
  • Sanghyuk Park
  • Nicholas Brown

Abstract

We test a set of inequalities in choice probabilities, shown to be necessary and sufficient for random utility by Falmagne (1978). We run an experiment in which each of 141 participants chooses six times from each doubleton or larger subset of a universe of five lotteries. We compute Bayes factors in favour of random utility, versus an alternative with unrestricted choice probabilities. There is strong evidence that a large majority of participants satisfy random utility; however, there is strong evidence against random utility for four participants. Results are fairly robust to the choice of prior.

Suggested Citation

  • William J McCausland & Clintin Davis-Stober & AAJ Marley & Sanghyuk Park & Nicholas Brown, 2020. "Testing the Random Utility Hypothesis Directly," The Economic Journal, Royal Economic Society, vol. 130(625), pages 183-207.
    • Handle: RePEc:oup:econjl:v:130:y:2020:i:625:p:183-207.
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    File URL: http://hdl.handle.net/10.1093/ej/uez039
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    Cited by:

    1. Gronau, Quentin F. & Bennett, Murray S. & Brown, Scott D. & Hawkins, Guy E. & Eidels, Ami, 2023. "Do choice tasks and rating scales elicit the same judgments?," Journal of choice modelling, Elsevier, vol. 49(C).
    2. Victor H. Aguiar & Maria Jose Boccardi & Nail Kashaev & Jeongbin Kim, 2023. "Random utility and limited consideration," Quantitative Economics, Econometric Society, vol. 14(1), pages 71-116, January.
    3. Alós-Ferrer, Carlos & Garagnani, Michele, 2021. "Choice consistency and strength of preference," Economics Letters, Elsevier, vol. 198(C).
    4. Caliari, Daniele, 2023. "Behavioural welfare analysis and revealed preference: Theory and experimental evidence," Discussion Papers, Research Unit: Economics of Change SP II 2023-303, WZB Berlin Social Science Center.
    5. Daniele Caliari & Henrik Petri, 2024. "Irrational Random Utility Models," Papers 2403.10208, arXiv.org.

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