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CEE-M Seminar

CEE-M Seminar

Stochastic dominance and preference for randomization

Speaker

Severine Toussaert
Associate professor at the University of Oxford

Website

Abstract

Decision theorists usually take a normative view on stochastic dominance: a DM who chooses a lottery that puts more weight on options he likes less must be making a mistake. In this project I argue that stochastic dominance violations may naturally occur in situations where anticipatory utility is high, such as going on a holiday trip. In such a situation, the DM may trade the certainty of going to his favorite destination for the excitement of not knowing where he will go. To document this phenomenon, I conduct an experiment in which participants make a series of binary choices between a sure destination and a lottery over holiday trips. The outcome of the lottery is revealed close to the date of travel. I vary the characteristics of the lotteries to understand when violations of stochastic dominance are most likely to occur and analyze their properties. I discuss implications for the modelling of anticipatory utility

Practical information

Location

UMR CEE-M
Université Montpellier - Faculté d'économie
Avenue Raymond Dugrand 34960 Montpellier

Dates & time

Feb 23, 2023
11:00
23
Feb

Contact

Petros Sekeris
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Raphaël Soubeyran
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