Journal article
Testing the ‘standard’ model of stochastic choice under risk
Journal of Risk and Uncertainty, Vol.45(3), pp.191-213
2012
Abstract
Models of stochastic choice are intended to capture the substantial amount of noise observed in decisions under risk. We present an experimental test of one model, which many regard as the default—the Basic Fechner model. We consider one of the model’s key assumptions—that the noise around the subjective value of a risky option is independent of other features of the decision problem. We find that this assumption is systematically violated. However the main patterns in our data can be accommodated by a more recent variant of the Fechner model, or within the random preference framework.
Details
- Title
- Testing the ‘standard’ model of stochastic choice under risk
- Authors/Creators
- D.J. Butler (Author/Creator)A. Isoni (Author/Creator)G.C. Loomes (Author/Creator)
- Publication Details
- Journal of Risk and Uncertainty, Vol.45(3), pp.191-213
- Publisher
- Springer
- Identifiers
- 991005543760007891
- Copyright
- Springer
- Murdoch Affiliation
- Do not use- Former Murdoch Business School
- Language
- English
- Resource Type
- Journal article
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Source: InCites
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- 6 Social Sciences
- 6.122 Economic Theory
- 6.122.1287 Risk Preferences
- Web Of Science research areas
- Business, Finance
- Economics
- ESI research areas
- Economics & Business