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Regret aversion or event-splitting effects? more evidence under risk and uncertainty

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Abstract

Recent experimental evidence has concluded that experimentally observed juxtaposition effects, as predicted by regret theory1, are largely attributable to “event-splitting effects” (ESEs) whereby the subjective decision weight attached to an outcome depends on the number of, as well as on the combined probability of, the disjoint events in which that outcome occurs. An experiment is reported that discriminates between juxtaposition effects and ESEs under conditions of both complete and incomplete information. The results confirm that juxtaposition effects are indeed largely due to ESEs and are robust over different informational conditions.

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Humphrey, S.J. Regret aversion or event-splitting effects? more evidence under risk and uncertainty. J Risk Uncertainty 11, 263–274 (1995). https://doi.org/10.1007/BF01207789

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