Adam Smith Business School

Dr Séverine Toussaert, University of Oxford.

"Stochastic Dominance and Preference for Randomization"
Tuesday, 25 April. 4 pm
Room 709 Boyd Orr Building

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 favourite 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 the implications for the modelling of anticipatory utility.

Bio

Severine Toussaert is an associate professor at the Department of Economics of the University of Oxford. She does research at the intersection of experimental economics, behavioral economics and decision theory. She leverages lab and field data to answer both theory-oriented and applied questions in a range of domains such as health or metascience.

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For further information, please contact business-school-research@glasgow.ac.uk

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First published: 21 March 2023