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Working paper 753
Yoram Halevy, David Walker-Jones, Lanny Zrill, "Difficult Decisions", 2023-07-25
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Abstract: We investigate the problem of identifying incomplete preferences in the domain of uncertainty by proposing an incentive-compatible mechanism that bounds the behavior that can be rationalized by very general classes of complete preferences. Hence, choices that do not abide by the bounds indicate that the decision maker cannot rank the alternatives. Data collected from an experiment that implements the proposed mechanism indicates that when choices cannot be rationalized by Subjective Expected Utility they are usually incompatible with general models of complete preferences. Moreover, behavior that is indicative of incomplete preferences is empirically associated with deliberate randomization.

Keywords: Incomplete Preferences, Identification, Elicitation, Choice Under Uncertainty, Deliberate Randomization, Experiment

JEL Classification: C91; D01; D81; D9

Last updated on July 12, 2012