Making case-based decision theory directly observable
Case-based decision theory (CBDT) provided a new way of revealing preferences, with decisions under uncertainty determined by similarities with cases in memory. This paper introduces a method to measure CBDT that requires no commitment to parametric families and that relates directly to decisions. Thus, CBDT becomes directly observable and can be used in prescriptive applications. Two experiments on real estate investments demonstrate the feasibility of our method. Our implementation of real incentives not only avoids the income effect, but also avoids interactions between different memories. We confirm CBDT's predictions except for one violation of separability of cases in memory.
|JEL||Consumer Economics: Empirical Analysis (jel D12), Criteria for Decision-Making under Risk and Uncertainty (jel D81), Production Analysis and Firm Location: General (jel R30)|
|Persistent URL||dx.doi.org/10.1257/mic.20150172, hdl.handle.net/1765/99129|
|Series||ERIM Top-Core Articles|
|Journal||American Economic Journal: Microeconomics|
Bleichrodt, H, Filko, M, Kothiyal, A.V, & Wakker, P.P. (2017). Making case-based decision theory directly observable. American Economic Journal: Microeconomics, 9(1), 123–151. doi:10.1257/mic.20150172