The Complexity Effects on Choice With Uncertainty - Experimental Evidence  

Oleh:

Sonsino, Doron ; Benzion, Uri ; Mador, Galit

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 112 no. 482 (2002), page 936-965.
Topik: EVIDENCE; effects; choice; experimental evidence
Fulltext: 936.pdf (232.93KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.8 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We present experimental evidence suggesting that human subjects dislike complexity in choice with uncertainty. Our results suggest that the probability of choosing a given alternative decreases with the relative complexity of that alternative. Complexity increases the noise in the choice process and the chances that the (otherwise) inferior alternative will be selected. Our results contradict the predictions of (discounted) expected utility theory and intuitively appealing axioms like 'stochastic dominance' and 'convexity'. These 'complexity effects' may lead to inefficient portfolio selection. The perceived complexity of a given lottery may depend on editing procedures and be subjected to framing effects.

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