Testing theories of financial decision making.
other · Level V
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- Record sourced from PubMed, PMID 27035947.
- Also identified by DOI 10.1073/pnas.1517760113 and PMC identifier 4839416.
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Abstract
We describe the observable content of some of the most widely used models of decision under uncertainty: models of translation invariant preferences. In particular, we characterize the models of variational, maxmin, constant absolute risk aversion, and constant relative risk aversion utilities. In each case we present a revealed preference axiom that is satisfied by a dataset if and only if the dataset is consistent with the corresponding utility representation. We test our axioms using data from an experiment on financial decisions.