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Axiom of Monotonicity: An Experimental Test

Sharma, Tridib and Vadovic, Radovan (2010): Axiom of Monotonicity: An Experimental Test.

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Abstract

The Axiom of Monotonicity (AM) is a necessary condition for a number of expected utility representations, including those obtained by de Finetti (1930), von Neumann and Morgenstern (1944) and Savage (1954). The paper reports on experiments that directly test AM by eliminating strategic uncertainty, context, and peer effects. In this sterile and simple environment we do not observe AM violations under uncertainty but we do observe violations under ambiguity.

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