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Abstract : This experiment compared the moment functions of a bet as predictors of choices among bets with the subjectively expected utility (SEU) maximization model. Bet parameters of Expected Value (EV), Variance (V), Skewness (Sk), and probabilities were independently varied in 182 3-outcome bets. Each of 12 Ss bid on each bet and played some bets for real money. Ss preferred high EV and low V, but had no preferences within Sk or probability levels. Sets of bets existed which were equal in all parameters; within such sets, Ss preferred bets with the largest least likely amount. The moment-function approach was rejected; the SEU model was not. A lexicographic ordering of variables was suggested. (Author)
Sarah Lichtenstein (Mon,) studied this question.
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