In an experiment, choice-based (revealed-preference) utility of money is derived from choices under risk, and choiceless (non-revealed-preference) utility from introspective strength-of-preference judgments. The well-known inconsistencies of risky utility under expected utility are resolved under prospect theory, yielding one consistent cardinal utility index for risky choice. Remarkably, however, this cardinal index also agrees well with the choiceless utilities, suggesting a relation between a choice-based and a choiceless concept. Such a relation implies that introspective judgments can provide useful data for economics, and can reinforce the revealed-preference paradigm. This finding sheds new light on the classical debate on ordinal versus cardinal utility.

Cardinal utility, Ordinal revolution, Prospect theory, Risky utility, Strength of preference
Microeconomics (jel B21), Criteria for Decision-Making under Risk and Uncertainty (jel D81),
Journal of Econometrics
Erasmus School of Economics

Abdellaoui, M, Barrios, C, & Wakker, P.P. (2007). Reconciling introspective utility with revealed preference: Experimental arguments based on prospect theory. Journal of Econometrics, 138(1), 356–378. doi:10.1016/j.jeconom.2006.05.025