• Media type: E-Book; Report
  • Title: Negative recency, randomization device choice, and reduction of compound lotteries
  • Contributor: Kaivanto, Kim [Author]; Kroll, Eike Benjamin [Author]
  • imprint: Karlsruhe: Karlsruher Institut für Technologie (KIT), Institut für Volkswirtschaftslehre (ECON), 2011
  • Language: English
  • DOI: https://doi.org/10.5445/IR/1000022861
  • Keywords: reduction of compound lotteries ; C91 ; D81 ; randomization devices ; law of small numbers ; design of experiments ; gambler's fallacy ; instruments and materials ; St. Petersburg paradox ; negative recency effect
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  • Description: We report an experiment in which subjects are not indifferent between real-money lotteries implemented with randomization devices that are equivalent under the Reduction Axiom. Instead choice behavior is consistent with subjective distortion of conditional probability, and this persists in treatment conditions that control for (i) computational limitations and (ii) possible confounding by ratio bias.
  • Access State: Open Access