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The Impact of Experience on Violations of Independence and Coalescing

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  • Schmidt, Ulrich
  • Birnbaum, Michael

Abstract

The present paper reports a repeated experiment on decision making under risk where subjects have to tackle the same choice problems in several rounds. We fit a simple error model and investigate how behavior changes in the course of the experiment. Our analysis complements and extends Hey (2001) who analyzes for each subject the fit of several preference functionals from round to round. Instead, we focus on choice problems allowing for direct tests of independence and coalescing. We show that variability of responses as well as violations of independence and coalescing decrease from earlier to later rounds. Our results provide evidence in favor of expected utility in conjunction with the discovered preference hypothesis.

Suggested Citation

  • Schmidt, Ulrich & Birnbaum, Michael, 2014. "The Impact of Experience on Violations of Independence and Coalescing," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100463, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc14:100463
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • 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
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other

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