Common ratio and common consequence effects arise from true preferences

Recent contributions suggest that the empirical evidence for the common ratio effect could be explained as noise instead of underlying preferences under "common assumptions." We revisit this argument using a more general method which allows to unambiguously distinguish noise from preferences nonparametrically and with less stringent assumptions. The results are independent of the assumed behavioral model or how noise affects choices. Applying this method to new experimental data we show that there is a systematic preference for the common ratio and the common consequence effects which cannot be explained by noise.

Publication Details

Journal
Zurich Open Repository and Archive (University of Zurich)
Published
2024-11-01
DOI
https://doi.org/10.5167/uzh-264661
Primary Topic
Decision-Making and Behavioral Economics
Type
article
Field-Weighted Citation Impact
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article

Common ratio and common consequence effects arise from true preferences

Zurich Open Repository and Archive (University of Zurich)
Decision-Making and Behavioral Economics
article

Common ratio and common consequence effects arise from true preferences

article en

Abstract

Recent contributions suggest that the empirical evidence for the common ratio effect could be explained as noise instead of underlying preferences under "common assumptions." We revisit this argument using a more general method which allows to unambiguously distinguish noise from preferences nonparametrically and with less stringent assumptions. The results are independent of the assumed behavioral model or how noise affects choices. Applying this method to new experimental data we show that there is a systematic preference for the common ratio and the common consequence effects which cannot be explained by noise.

Zurich Open Repository and Archive (University of Zurich)
Reduced inequalities
Openalex Percentile: Top 65%
Decision-Making and Behavioral Economics
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Common ratio and common consequence effects arise from true preferences · Zurich Open Repository and Archive (University of Zurich) (2024) | TGRS Research Map | TGRS