Do non-expected utility choice patterns spring from hazy preferences? An experimental study of choice ‘errors’

Individuals often have only incompletely known preferences when choosing between pair-wise gambles. Particular presentations of the choice problem may then passively encourage the use of some choice method to clarify the preference. Different presentational displays can then lead to choice patterns predicted by one or other Generalised Expected Utility theory. When a preference is not or cannot be constructed, choices will be arbitrary. I run an experiment that uses three different presentational displays and incorporates a ‘strength of preference indicator’. The experiment investigates regret theory as an example of a Generalised Expected Utility theory. As preference strength is found to vary by display, regret effects, event-splitting effects and choice reversals are all found to be display dependent. It is suggested that the evidence is best explained by assuming incomplete EU preferences which are clarified by constructive heuristics, rather than some Generalised Expected Utility model coupled with an error term. ©2000 Elsevier Science B.V. All rights reserved. JEL classification: C91; D81