Violations of the independence axiom in common ratio problems: An experimental test of some competing hypotheses (Q750274)

In recent years, many new theories of choice under uncertainty have been proposed as alternatives to expected utility theory. Among the best known of such theories are \textit{M. Machina}'s [Econometrica 50, 277-323 (1982; Zbl 0475.90015)] generalized expected utility theory, \textit{D. Kahneman} and \textit{A. Tversky}'s [ibid. 47, 263-291 (1979; Zbl 0411.90012)] prospect theory and the rank-dependent theory of \textit{J. Quiggin} [J. Econ. Behavior Organization 3, pp. 323 (1982); and ``Anticipated utility: Some developments in the economic theory of uncertainty'', Ph. D. Thesis, Univ. New England/Australia 1986] and \textit{M. Yaari} [Econometrica 55, 95-115 (1987; Zbl 0616.90005)]. In this paper, we shall present the results of an experiment in which we tested some of the predictions of these theories. A major task of the paper is to describe the strategy we adopted for testing prospect theory and rank-dependent theory; this, as far as we know, is new.