ONLINE – Applied Micro Workshop – Shachar Kariv, “Ever Since Allais and Ellsberg”
Aluma Dembo, Shachar Kariv, Matthew Polisson, and John Quah: “Ever Since Allais and Ellsberg” Many experiments test the empirical validity of the Savage (1954) axioms on which von Neumann–Morgenstern (1947) Expected Utility Theory (EUT) is based. However, much of the experimental and behavioral literature on decisions under uncertainty is specifically directed towards finding violations of independence and choosing between EUT and competing decision-theoretic models that have been proposed as alternatives to EUT. We provide a comprehensive (and nonparametric) test of complete representations of preferences rather than focusing on individual axiom(s) under risk and ambiguity. Our main result—that violations of independence are relatively minor relative to violations of ordering and monotonicity—is what Quiggin (1982) calls an “undesirable result.” Ordering (completeness and transitivity) and monotonicity (with respect to first-order stochastic dominance) are more fundamental principles than the familiar independence axiom, and they are embodied in the most prominent non-EUT theories of choice under uncertainty.
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Nov 10, 2020 from 16:00 to 17:30 |
| Where | Zoom URL TBA via mailing list |
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