Non-expected utility maximizers behave as if expected utility maximizers: An experimental test

Abstract

We investigate the behaviors of subjects who either do or do not adhere to the expected utility theory using the Becker–DeGroot–Marschak (BDM) method. We directly examine the validity of the expected utility theory in order to distinguish subjects into two groups: those who adhere to the expected utility theory (expected utility maximizers) and those who do not adhere to it (non-expected utility maximizers), and then execute the BDM experiment in the both groups. We find that the differences in the stated prices between the expected and non-expected utility maximizers are not significant. This result implies practical usefulness for the BDM method.