TY  - GEN
AB  - The asymmetric dominance effect refers to the phenomenon according to which the choice
probability of an alternative increases when an inferior alternative - the decoy - is included
into the choice set. The objective of this experimental study is twofold. First, we investigate
the asymmetric dominance effect on two-outcome lotteries with almost equal expected values.
We find that the impact of a decoy on low-variance lotteries (LVLs) is much higher than on
high-variance lotteries (HVLs). Second, we examine the asymmetric dominance effect in the
presence of two decoys. While the asymmetric dominance effect persists when the choice
set includes two decoys, the effect is not always further enhanced compared to the setting
with one decoy and again much stronger for LVLs than for HVLs. Controlling for subjects’
degrees of risk aversion, we find support for consistency between individual risk preferences
and choice behavior among the lotteries. However, we observe decoy effects of equal strength
irrespective of the subjects’ degree of risk aversion. Thus, our analysis indicates that to a
substantial extent the presence of decoys subtly makes decision-makers choose against their
risk preferences by favoring lotteries that entail risks contrary to their elicited individual
risk-taking profile.
DA  - 2017
KW  - Asymmetric dominance effect
KW  - decoy effects
KW  - multiple decoys
KW  - risk aversion
KW  - individual decision making
KW  - experimental economics
LA  - eng
PY  - 2017
SN  - 0931-6558
SP  - 24-
TI  - Asymmetric dominance effect with multiple decoys for low- and high-variance lotteries
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29106712
Y2  - 2024-11-22T05:20:27
ER  -