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Journal Article

Are Preferences Monotonic? Testing Some Predictions of Regret Theory

Graham Loomes, Chris Starmer and Robert Sugden
Economica
New Series, Vol. 59, No. 233 (Feb., 1992), pp. 17-33
DOI: 10.2307/2555063
Stable URL: http://www.jstor.org/stable/2555063
Page Count: 17
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Are Preferences Monotonic? Testing Some Predictions of Regret Theory
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Abstract

In this paper we demonstrate that the assumption of `regret aversion', which has been invoked in regret theory to explain several well documented violations of expected utility theory, also implies the existence of strict preferences between some stochastically equivalent actions and implies certain systematic violations of monotonicity. We report an experimental test of these predictions. We find that, while choices between stochastically equivalent actions are entirely consistent with expected utility theory, there is clear evidence of the monotonicity violations predicted by regret theory.

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