Abstract
Both in experimental and in theoretical contexts, it is often the case that two or more decision problems are at first sight equivalent to the decision analyst. It is noted that in the case of “preference reversals” the choice problems may not be equivalent. A careful description of the problem in terms of decision trees is suggested.
The empirical observations in preference reversal experiments may be predicted by the linearized moments model (LMM). The LMM contains transitive preferences, but not the substitution principle of expected utility theory. This places the LMM and the EURDP model (expected utility with rank dependent probability) in the same class. Some advantages of the LMM are noted.
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© 1989 Kluwer Academic Publishers
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Munera, H.A. (1989). Prediction of Preference Reversals by the Linearized Moments Model. In: Grunert, K.G., Ölander, F. (eds) Understanding Economic Behaviour. Theory and Decision Library, vol 11. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-2470-3_15
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DOI: https://doi.org/10.1007/978-94-009-2470-3_15
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