Bachelor of Arts
Preference, Reversal, Field, Independence, Axiom, Mixture, Replacement, Separability, Gambling
In his article "Dynamic Consistency and Non-Expected Utility Models of Choice Under Uncertainty," (Journal of Economic Literature, Dec. 1989), Mark Machina asserted that preference reversal (PR) is caused by a violation of the independence axiom. Amos Tversky, Paul Slovic, and Daniel Kahneman submit, however, that "Observed preference reversal ... cannot be adequately explained by violations of independence...." This paper tests these claims by breaking the independence axiom into its two component parts: mixture and replacement separability.
Adelman, Dan, "Preference Reversal and the Independence Axiom" (1992). Honors Papers. 563.