Negative recency, randomization device choice, and reduction of compound lotteries

Arbeitspapier

We report an experiment in which subjects are not indifferent between real-money lotteries implemented with randomization devices that are equivalent under the Reduction Axiom. Instead choice behavior is consistent with subjective distortion of conditional probability, and this persists in treatment conditions that control for (i) computational limitations and (ii) possible confounding by ratio bias.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: KIT Working Paper Series in Economics ; No. 22

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Design of Experiments: Laboratory, Individual
• Subject: reduction of compound lotteries ; negative recency effect ; gambler's fallacy ; law of small numbers ; randomization devices ; instruments and materials ; design of experiments ; St. Petersburg paradox

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kaivanto, Kim ; Kroll, Eike Benjamin
• Event: Veröffentlichung
• (who): Karlsruher Institut für Technologie (KIT), Institut für Volkswirtschaftslehre (ECON)
• (where): Karlsruhe
• (when): 2011

Further information

• DOI: doi:10.5445/IR/1000022861
• Handle: http://hdl.handle.net/10419/45178
• URN: urn:nbn:de:swb:90-228610
• Last update: 10.03.2025, 11:42 AM CET