Note on Small Feedback-Based Decisions and Their Limited Correspondence to Description-Based Decisions

CERGE-EI Working Paper No. 218

Posted: 24 Apr 2005

Date Written: October 2003

Abstract

Barron and Erev (2003) report experimental results revealing differences in risk attitude in small feedback-based problems as opposed to conventional description-based problems. This note shows that theoretical predictions drawing on a simple decision rule, known as the heuristic of relative probability comparisons (HRPC), fit the experimental data in Barron and Erev (2003) surprisingly well: even in the choice situation where the HRPC predicts an exact indifference the actual distribution of subject responses was 49% to 51%.

Keywords: Heuristic of relative probability comparisons, feedback-based decisions

JEL Classification: C91, D11

Suggested Citation

Blavatskyy, Pavlo R., Note on Small Feedback-Based Decisions and Their Limited Correspondence to Description-Based Decisions (October 2003). CERGE-EI Working Paper No. 218, Available at SSRN: https://ssrn.com/abstract=680421

Pavlo R. Blavatskyy (Contact Author)

Montpellier Business School ( email )

2300 Avenue des Moulins
Montpellier, 34080
France

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