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An experimental investigation of violations of transitivity in choice under uncertainty

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Abstract

Several models of decision-making imply systematic violations of transitivity of preference. Our experiments explored whether people show patterns of intransitivity predicted by regret theory and majority rule. To distinguish “true” violations from those produced by “error,” a model was fit in which each choice can have a different error rate and each person can have a different pattern of true preferences that need not be transitive. Error rate for a choice is estimated from preference reversals between repeated presentations of that same choice. Our results showed that very few people repeated intransitive patterns. We can retain the hypothesis that transitivity best describes the data of the vast majority of participants.

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Article 22 July 2014

Jeffrey Sanford Russell, John Hawthorne & Lara Buchak

Notes

  1. Although the model of Brandstätter et al. (2006) can violate transitivity, it does not predict violations of transitivity in these studies. In Series I, this model predicts C ≻ A ≻ B, in agreement with the most frequently repeated pattern of Study 1. In Study 2 Series II, it predicts C ≻ A ≻ B, which was repeated by only one person; instead, the modal pattern was C ≻ B ≻ A. The TAX model with prior parameters implies this pattern (C ≻ B ≻ A) in both studies. Cumulative prospect theory with parameters of Tversky and Kahneman (1992) implies the order A ≻ C ≻ B in both studies.

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Acknowledgments

We thank the editor and two referees for very helpful comments. Support was received from National Science Foundation Grants, SES 99–86436, and BCS-0129453.

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Authors and Affiliations

  1. Department of Psychology, CSUF H-830M, Fullerton, CA, 92834-6846, USA

    Michael H. Birnbaum

  2. Department of Economics, University of Kiel, Kiel, Germany

    Ulrich Schmidt

  3. Kiel Institute for the World Economy, Kiel, Germany

    Ulrich Schmidt

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  1. Michael H. Birnbaum
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  2. Ulrich Schmidt
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Correspondence to Michael H. Birnbaum.

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Birnbaum, M.H., Schmidt, U. An experimental investigation of violations of transitivity in choice under uncertainty. J Risk Uncertain 37, 77–91 (2008). https://doi.org/10.1007/s11166-008-9043-z

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