A Tailor-Made Test of Intransitive Choice

Abstract

This paper reports a new test of intransitive choice using individual measurements of regret- and similarity-based intransitive models of choice under uncertainty. Our test is tailor-made and uses subject-specific stimuli. Despite these features, we observed only a few intransitivities. A possible explanation for the poor predictive performance of intransitive choice models is that they only allow for interactions between acts. They exclude within-act interactions by retaining the assumption that preferences are separable over states of nature. Prospect theory, which relaxes separability but retains transitivity, predicted choices better. Our data suggest that descriptively realistic models must allow for within-act interactions but may retain transitivity.