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Herrmann, Tabea; Hübler, Olaf; Menkhoff, Lukas; … - 2016

This paper complements evidence on the Allais paradox from advanced countries and educated people by a novel investigation in a poor rural area. The share of Allais-type behavior is indeed high and related to characteristics of “lacking ability”, such as poor education, unemployment, and...

Persistent link: https://www.econbiz.de/10011452571

Confronting the representative consumer with household-size heterogeneity

Koulovatianos, Christos; Schröder, Carsten; Schmidt, Ulrich - 2010

Much analysis in macroeconomics empirically addresses economy-wide incentives behind consumer/investment choices by using insights from the way a single representative household would behave. Heterogeneity at the micro level can jeopardize attempts to back up the representative consumer...

Persistent link: https://www.econbiz.de/10008699605

Common consequence effects with pricing data

Schmidt, Ulrich; Trautmann, Stefan T. - 2010

This paper presents an experimental study analyzing common consequence effects with binary choice, willingness-to-pay (WTP), and willingness-to-accept (WTA). Consistent with previous research we do not find clearcut evidence of fanning out in the absence of certainty effects. Violation rates of...

Persistent link: https://www.econbiz.de/10003950279

Testing independence conditions in the presence of errors and splitting effects

Birnbaum, Michael H.; Schmidt, Ulrich; Schneider, Miriam D. - 2010

This paper presents an experimental test of several independence conditions implied by expected utility and alternative models. We perform a repeated choice experiment and fit an error model that allows us to discriminate between true violations of independence and those that can be attributed...

Persistent link: https://www.econbiz.de/10003950296

Allais paradoxes can be reversed by presenting choices in canonical split form

Birnbaum, Michael H.; Schmidt, Ulrich - 2010

This paper tests Birnbaum’s (2004) theory that the constant consequence paradoxes of Allais are due to violations of coalescing, the assumption that when two branches lead to the same consequence, they can be combined by adding their probabilities. Rank dependent utility and cumulative...

Persistent link: https://www.econbiz.de/10003950768

Asymmetrically dominated alternatives and random incentive mechanisms

Schmidt, Ulrich - 2010

This note presents an experimental study of the random lottery incentive mechanism. In the baseline treatment we observe risk behavior in a given choice problem. We show that by integrating a second, asymmetrically dominated choice problem in a random incentive mechanism risk behavior can be...

Persistent link: https://www.econbiz.de/10008647679

Explaining the harmonic sequence paradox

Schmidt, Ulrich; Zimper, Alexander - 2011

According to the harmonic sequence paradox (Blavatskyy 2006), an expected utility decision maker's willingness-to-pay for a gamble whose expected payoffs evolve according to the harmonic series is finite if and only if his marginal utility of additional income becomes zero for rather low payoff...

Persistent link: https://www.econbiz.de/10009244380

Reconsidering the common ratio effect : the roles of compound independence, reduction, and coalescing

Schmidt, Ulrich; Seidl, Christian - 2014

Common ratio effects should be ruled out if subjects' preferences satisfy compound independence, reduction of compound lotteries, and coalescing. In other words, at least one of these axioms should be violated in order to generate a common ratio effect. Relying on a simple experiment, we...

Persistent link: https://www.econbiz.de/10010367224

The framing of games and the psychology of play

Dufwenberg, Martin; Gächter, Simon; Hennig-Schmidt, Heike - 2010

Psychological game theory can provide rational-choice-based framing effects; frames influence beliefs, beliefs …-shot public good games we show that frames affect subject’s first- and second-order beliefs, and contributions. From a … contributions are related to second- and first-order beliefs, respectively. Our results are consistent with either. -- Framing …

Persistent link: https://www.econbiz.de/10008986776

Paradoxes and mechanisms for choice under risk by James C. Cox, Vjollca Sadiraj, and Ulrich Schmidt

Cox, James C.; Sadiraj, Vjollca; Schmidt, Ulrich - 2011

Experiments on choice under risk typically involve multiple decisions by individual subjects. The choice of mechanism … hypothesis or the independence axiom. We report two experiments with 710 subjects. Experiment 1 provides the first simple test of …

Persistent link: https://www.econbiz.de/10009160793