Revealed Preferences for Randomization: An Overview

Abstract

We survey the empirical evidence on subjects' desire to randomize and its relation to stochastic choice. Preferences for randomization are documented by a substantial body of empirical work using different methodologies and in several domains, including objective lotteries and ambiguous gambles, social preferences, time preferences, and games. The desire to randomize is correlated across domains and related to standard evidence of stochastic choice. We relate this evidence to models of nonexpected utility and incomplete preferences.

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