Transitive Regret Over Statistically Independent Lotteries

17 Pages Posted: 19 Apr 2012

See all articles by Sushil Bikhchandani

Sushil Bikhchandani

University of California, Los Angeles - Anderson School of Management

Uzi Segal

Boston College - Department of Economics

Date Written: March 31, 2012

Abstract

Preferences may arise from regret, i.e., from comparisons with alternatives forgone by the decision maker. We show that when the choice set consists of pairwise statistically independent lotteries, transitive regret-based behavior is consistent with betweenness preferences and with a family of preferences that is characterized by a consistency property. Examples of consistent preferences include CARA, CRRA, and anticipated utility.

Keywords: regret, transitivity, non-expected utility

JEL Classification: D81

Suggested Citation

Bikhchandani, Sushil and Segal, Uzi, Transitive Regret Over Statistically Independent Lotteries (March 31, 2012). Available at SSRN: https://ssrn.com/abstract=2042791 or http://dx.doi.org/10.2139/ssrn.2042791

Sushil Bikhchandani (Contact Author)

University of California, Los Angeles - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095
United States
310-206-2686 (Phone)
310-825-1581 (Fax)

Uzi Segal

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

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