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Ever since Allais

Author

Listed:
  • Aluma Dembo

    (Institute for Fiscal Studies and University of Oxford)

  • Shachar Kariv

    (Institute for Fiscal Studies)

  • Matthew Polisson

    (Institute for Fiscal Studies and University of Bristol)

  • John Quah

    (Institute for Fiscal Studies)

Abstract

The Allais critique of expected utility theory (EUT) has led to the development of theories of choice under risk that relax the independence axiom, but which adhere to the conventional axioms of ordering and monotonicity. Unlike many existing labora-tory experiments designed to test independence, our experiment systematically tests the entire set of axioms, providing much richer evidence against which EUT can be judged. Our within-subjects analysis is nonparametric, using only information about revealed preference relations in the individual-level data. For most subjects we ?nd that departures from independence are statistically signi?cant but minor relative to departures from ordering and/or monotonicity.

Suggested Citation

  • Aluma Dembo & Shachar Kariv & Matthew Polisson & John Quah, 2021. "Ever since Allais," IFS Working Papers W21/15, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:21/15
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    Cited by:

    1. Matthew Polisson & John Quah, 2022. "Rationalizability, Cost-Rationalizability, and Afriat's Efficiency Index," Bristol Economics Discussion Papers 22/754, School of Economics, University of Bristol, UK.
    2. Georgios Gerasimou, 2021. "Eliciting and Distinguishing Between Weak and Incomplete Preferences: Theory, Experiment and Computation," Papers 2111.14431, arXiv.org, revised Dec 2024.

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