Tests of Hypotheses about Certainty Equivalents and Joint Receipt of Gambles |
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| Institution: | 1. Production Management Department, School of Business, Istanbul University, Avcılar Campus, Block A, 3rd Floor, Avcılar, 34322, Istanbul, Turkey;2. Quantitative Methods Department, School of Business, Istanbul University, 34322, Istanbul, Turkey;1. School of Management, Hefei University of Technology, Hefei 230009, Anhui, PR China;2. Key Laboratory of Process Optimization and Intelligent Decision-making, Ministry of Education, Hefei 230009, Anhui, PR China;3. Department of Mathematics, Brunel University, Uxbridge UB8 3PH, UK;4. Department of Statistics, Florida State University, Tallahassee 32304, USA |
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| Abstract: | The present experiment was designed to test whether choice-induced certainty equivalents (CEs) and joint receipt (JR) of gambles exhibit certain properties such as the equality of JR and convolution, monotonicity of convolution, monotonicity of JR over gambles, additivity of JR over gambles and money, segregation of a common consequence, additive segregation when JR is replaced by +, and several other derivative properties. Subjects were partitioned into "gamblers" and "nongamblers" by their performance on screening gambles. Assuming that CE is order preserving, monotonicity of JR and additivity of JR over gambles were both rejected whereas additivity of JR over money, segregation, and additive segregation were all sustained for gamblers and nongamblers. For gamblers, convolution is not monotonic but is equivalent to JR and segregation and additive segregation are not equivalent. For nongamblers, convolution is monotonic but is not equivalent to JR and segregation and additive segregation are probably equivalent. |
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