Events

(joint with Séverine Toussaert)

Abstract: Preferences are often assumed to display globally one-sided mixture attitudes. The most prominent class is convex preferences, which are globally mixture-loving. We investigate richer preferences with mixed mixture attitudes that are neither convex nor concave. Within this class, we provide a hierarchy capturing how far preferences depart from one-sided mixture attitudes. The strongest deviation we study is strong non-betweenness, which is equivalent to indifference curves being neither convex nor concave. We show theoretically that strong non-betweenness is not knife-edge and follows from minimal departures from one-sidedness. At first glance, strong non-betweenness may appear to be a demanding choice restriction. We show, however, that previous experimental designs can seldom test for it. In our own high-stakes experiment, around 40% of subjects display strong non-betweenness. Our results suggest that mixture attitudes are considerably richer, and departures from one-sidedness considerably more prevalent, than standard preference models and experiments typically allow.

The Economic Theory Lunchtime Workshops are convened by Meg Meyer.