Testing for independence while allowing for probabilistic choice

Loomes, Graham; Pogrebna, Ganna

doi:10.1007/s11166-014-9205-0

Cited by 15 publications

(12 citation statements)

References 25 publications

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“…A total of 101 participants saw the questions relating to preference reversal as reported in this paper. Another 148 were presented with questions that were investigating the independence axiom-the results of which are reported in Loomes and Pogrebna (2014b). So in total, 249 individuals participated in one or other of the experiments, and the 100 who played a decision for real were drawn at random from the 249.…”

Section: Concluding Remarks: Some Challenges For Theory and Practicementioning

confidence: 99%

Do Preference Reversals Disappear When We Allow for Probabilistic Choice?

Loomes

Pogrebna

2017

Management Science

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Abstract. The "preference reversal phenomenon," a systematic disparity between people's valuations and choices, poses challenges for theory and policy. Using a very general formulation of probabilistic preferences, we show that the phenomenon is not mainly due to intransitive choice. We find a high degree of regularity within choice tasks and also within valuation tasks, but the two types of tasks appear to evoke very different cognitive processes, even when the experimental environment tries to minimise differences. We discuss possible implications for modelling and eliciting preferences.History: Accepted by Manel Baucells, decision analysis.

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Section: Concluding Remarks: Some Challenges For Theory and Practicementioning

confidence: 99%

Do Preference Reversals Disappear When We Allow for Probabilistic Choice?

Loomes

Pogrebna

2017

Management Science

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“…2), which suggest future investigations of distinct behavioral strategies leading to violations in different directions. Additionally, future experiments could investigate different classes of economic models that might capture more reliably the pattern of IA violations when allowing for the stochasticity of choice (Blavatskyy & Pogrebna, 2010;Loomes & Pogrebna, 2014). Our tests might support further development of decision theory and computer algorithms, for example by using our data for advancing modelfree and model-based reinforcement learning theory into the domain of economic choice research (Daw et al, 2011;Miranda et al, 2020).…”

Section: Discussionmentioning

confidence: 87%

Risky choice: Probability weighting explains independence axiom violations in monkeys

2022

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Expected Utility Theory (EUT) provides axioms for maximizing utility in risky choice. The Independence Axiom (IA) is its most demanding axiom: preferences between two options should not change when altering both options equally by mixing them with a common gamble. We tested common consequence (CC) and common ratio (CR) violations of the IA over several months in thousands of stochastic choices using a large variety of binary option sets. Three monkeys showed consistently few outright Preference Reversals (8%) but substantial graded Preference Changes (46%) between the initial preferred gamble and the corresponding altered gamble. Linear Discriminant Analysis (LDA) indicated that gamble probabilities predicted most Preference Changes in CC (72%) and CR (88%) tests. The Akaike Information Criterion indicated that probability weighting within Cumulative Prospect Theory (CPT) explained choices better than models using Expected Value (EV) or EUT. Fitting by utility and probability weighting functions of CPT resulted in nonlinear and non-parallel indifference curves (IC) in the Marschak-Machina triangle and suggested IA non-compliance of models using EV or EUT. Indeed, CPT models predicted Preference Changes better than EV and EUT models. Indifference points in out-of-sample tests were closer to CPT-estimated ICs than EV and EUT ICs. Finally, while the few outright Preference Reversals may reflect the long experience of our monkeys, their more graded Preference Changes corresponded to those reported for humans. In benefitting from the wide testing possibilities in monkeys, our stringent axiomatic tests contribute critical information about risky decision-making and serves as basis for investigating neuronal decision mechanisms.

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“…2), which suggest future investigations of distinct behavioral strategies leading to violations in different directions. Additionally, future experiments could investigate different classes of economic models that might capture more reliably the pattern of IA violations when allowing for the stochasticity of choice (P. R. Blavatskyy & Pogrebna, 2010; Loomes & Pogrebna, 2014). Our tests might support further development of decision theory and computer algorithms, for example by using our data for advancing model-free and model-based reinforcement learning theory into the domain of economic choice research (Daw, Gershman, Seymour, Dayan, & Dolan, 2011; Miranda, Malalasekera, Behrens, Dayan, & Kennerley, 2020).…”

Section: Discussionmentioning

confidence: 99%

Risky choice: probability weighting explains Independence Axiom violations in monkeys

Ferrari-Toniolo

Seak

Schultz

2021

Preprint

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Expected Utility Theory (EUT) provides axioms for maximizing utility in risky choice. The independence axiom (IA) is its most demanding axiom: preferences between two options should not change when altering both options equally by mixing them with a common gamble. We tested common consequence (CC) and common ratio (CR) violations of the IA in thousands of stochastic choice over several months using a large variety of binary option sets. Three monkeys showed few outright Preference Reversals (8%) but substantial graded Preference Changes (46%) between the initial preferred gamble and the corresponding altered gamble. Linear Discriminant Analysis (LDA) indicated that gamble probabilities predicted most Preference Changes in CC (72%) and CR (87%) tests. The Akaike Information Criterion indicated that probability weighting within Cumulative Prospect Theory (CPT) explained choices better than models using Expected Value (EV) or EUT. Fitting by utility and probability weighting functions of CPT resulted in nonlinear and non-parallel indifference curves (IC) in the Marschak-Machina triangle and suggested IA non-compliance of models using EV or EUT. Indeed, CPT models predicted Preference Changes better than EV and EUT models. Indifference points in out-of-sample tests were closer to CPT-estimated ICs than EV and EUT ICs. Finally, while the few outright Preference Reversals may reflect the long experience of our monkeys, their more graded Preference Changes corresponded to those reported for humans. In benefitting from the wide testing possibilities in monkeys, our stringent axiomatic tests contribute critical information about risky decision-making and serves as basis for investigating neuronal decision mechanisms.

show abstract

Testing for independence while allowing for probabilistic choice

Cited by 15 publications

References 25 publications

Do Preference Reversals Disappear When We Allow for Probabilistic Choice?

Do Preference Reversals Disappear When We Allow for Probabilistic Choice?

Risky choice: Probability weighting explains independence axiom violations in monkeys

Risky choice: probability weighting explains Independence Axiom violations in monkeys

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