Are bygones bygones?

This article reports an experiment which tests the principle of separability, i.e. that behaviour in a dynamic choice problem is independent of history and of unreachable eventualities. Although this is a well-known principle of orthodox decision theory and central to conventional economic modelling...

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Bibliographic Details
Published in:Theory and decision 2012-08, Vol.73 (2), p.185-202
Main Authors: Cubitt, Robin, Ruiz-Martos, Maria, Starmer, Chris
Format: Article
Language:English
Subjects:
Applied sciences
Behavioral/Experimental Economics
Behavioural economics
Choices
Cleaning
Decision Making
Decision theory
Decision theory. Utility theory
Decision trees
Decisions
Dynamics
Economic Models
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Exact sciences and technology
Expected utility
Experiment design
Experimental design
Finance
Game Theory
Grounds
History
Insurance
Management
Mathematics
Operational research and scientific management
Operational research. Management science
Operations Research/Decision Theory
Principles
Probability and statistics
Psychology
Research Design
Risk
Risk factors
Sciences and techniques of general use
Social and Behav. Sciences
Statistics
Statistics for Business
Studies
Treatment Methods
Utilities
Utility theory
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Summary:This article reports an experiment which tests the principle of separability, i.e. that behaviour in a dynamic choice problem is independent of history and of unreachable eventualities. Although this is a well-known principle of orthodox decision theory and central to conventional economic modelling, it has been questioned on grounds suggested by non-expected utility models of choice under risk and by the psychology of affective influences on risk-taking. Our experimental design, which provides between-subjects tests of separability using three treatments in which the history preceding a decision is manipulated, is inspired by these concerns. We expose separability to a clean and harsh test, but find no evidence that it is violated.
ISSN:0040-5833
1573-7187
DOI:10.1007/s11238-010-9233-4