Abstract
In this paper a series of experiments are reported using human subjects choosing over distributions of negative expected value. The experiments were designed to examine preference reversals and fanning out type violations of expected utility theory. Each subject was endowed with an initial wealth position and asked to choose between lotteries in which they were forced, if they lost, to forfeit a portion of their fixed endowment. Consistent and systematic violations of expected utility theory were found within the loss domain which were a mirror reflection of those found within the gain domain. Preference reversals were also present over losses, but the reversal rate was lower than the rate for prospects with positive expected value. No relationship between fanning out type violations of expected utility theory and preference reversals was found, in contrast to recent theoretical predictions.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
