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Ranges of Randomization

Author

Listed:
  • Marina Agranov

    (California Institute of Technology)

  • Pietro Ortoleva

    (Princeton University)

Abstract
A growing literature has shown how people sometimes prefer to randomize between two options. We study how prevalent this behavior is in an experiment using a novel and simple method. We allow subjects to randomize between options in a series of questions in which one of the alternatives is fixed and the other varies, capturing the range of values for which subjects want to randomize. We find that most subjects choose to randomize in most questions. Crucially, they do so for ranges of values are ‘very large’: for example, when comparing a fixed amount $x with a lottery that pays $20 or $0 with equal chances, subjects typically randomize for all xs between $5.3 and $12. Large ranges are found in other questions as well, showing how prevalent the desire to randomization is. We connect ranges to standard choices, Certainty-Bias, and non-Monotonicity.

Suggested Citation

  • Marina Agranov & Pietro Ortoleva, 2021. "Ranges of Randomization," Working Papers 2021-72, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2021-72
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    File URL: http://pietroortoleva.com/papers/Ranges.pdf
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    References listed on IDEAS

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    Cited by:

    1. Narayanaswamy Balakrishnan & Efe A. Ok & Pietro Ortoleva, 2021. "Inferential Choice Theory," Working Papers 2021-60, Princeton University. Economics Department..
    2. Elias Bouacida & Renaud Foucart, 2022. "Rituals of Reason," Working Papers 344119591, Lancaster University Management School, Economics Department.

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    More about this item

    Keywords

    Preference for Randomization; Incomplete Preferences; Non-Expected Utility;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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