MBS 94-14
Test of Hypotheses About Certainty Equivalents and Joint Receipt of
Gambles
Younghee Cho, R. Duncan Luce
The present experiment was designed to test whether PEST-based certainty
equivalents (CEs) and joint receipt (JR) of gambles exhibit certain properties
such as monotonicity of JR, additivity of JR over gambles and money, segregation
of a common consequence, additive segregation when JR is replaced by +,
monotonicity of convolution, identity of convolution and JR, and several
other derivative properties. Subjects were partitioned into gamblers and
non-gamblers by their performance on screening gambles. Assuming that CE
is order preserving, monotonicity of JR and additivity of JR over gambles
were both rejected whereas additivity of JR over money, segregation, and
additive segregation were all sustained for gamblers and non-gamblers.
For gamblers, convolution is not monotonic but is equivalent to JR and
segregation and additive segregation are not equivalent. For non-gamblers,
convolution is monotonic but is not equivalent to JR and segregation and
additive segregation are equivalent.