Do Decision Makers Have Subjective Probabilities? An Experimental Test

David Ronayne, Roberto Veneziani and William R. Zame
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William R. Zame: University of California at Los Angeles

No 940, Working Papers from Queen Mary University of London, School of Economics and Finance

Abstract: Abstract: Anscombe and Aumann (1963) offer a definition of subjective probability in terms of comparisons with objective probabilities. That definition – which has provided the basis for much of the succeeding work on subjective probability – presumes that the subjective probability of an event is independent of the prize consequences of that event, a property we term Prize Independence. We design experiments to test Prize Independence and find that a large fraction of our subjects violate it; thus, they do not have subjective probabilities. These findings raise questions about the empirical relevance of much of the literature on subjective probability.

Keywords: subjective probability; choice under uncertainty; online experiments. (search for similar items in EconPapers)
JEL-codes: D01 D81 D84 (search for similar items in EconPapers)
Date: 2022-06-22
New Economics Papers: this item is included in nep-dcm, nep-des, nep-exp, nep-mac and nep-upt
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Working Paper: Do decision makers have subjective probabilities? An experimental test (2022)
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