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Estimation of indifference curves in the Marschak‐Machina triangle a direct test of the “fanning out” hypothesis
Author(s) -
Hey John D.,
Strazzera Elisabetta
Publication year - 1989
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.3960020404
Subject(s) - test (biology) , econometrics , estimation , computer science , mathematical economics , mathematics , statistics , psychology , economics , paleontology , management , biology
The ongoing debate on the correct modelling of economic behaviour under risk makes heavy expositional use of the 'Marschak‐Machina Triangle'. This has also been used when constructing tests of the various competing theories. In this paper, we adopt a more direct approach ‐ by estimating subjects' indifference maps in the Triangle. Employing an interview technique, we find that most subjects have maps which are nearly consistent with those implied by Subjective Expected Utility theory.