An Empirical Evaluation of the Transitivity, Monotonicity, Accounting, and Conjoint Axioms for Perceived Risk

23 Pages Posted: 7 Jan 2009  

Elke U. Weber

Columbia Business School - Management & Psychology

William P. Bottom

Washington University in St. Louis - John M. Olin Business School

Date Written: April 1990

Abstract

This study tests the adequacy of the axioms underlying Luce and Weber's (1986) conjoint expected risk model. Risk judgments are found to be transitive. Monotonicity or the substitution principle per se seems to hold, but the related probability accounting assumption is violated. The conjoint structure assumptions about the effect of change of scale transformations on risk hold for negative-outcome lotteries but encounter some difficulty for positive-outcome lotteries. Possible explanations for violations are suggested, and implications of these results for the modeling of perceived risk are discussed.

Suggested Citation

Weber, Elke U. and Bottom, William P., An Empirical Evaluation of the Transitivity, Monotonicity, Accounting, and Conjoint Axioms for Perceived Risk (April 1990). Organizational Behavior and Human Decision Processes, Vol. 45, No. 2, pp. 253-275. Available at SSRN: https://ssrn.com/abstract=1323471

Elke U. Weber (Contact Author)

Columbia Business School - Management & Psychology ( email )

3022 Broadway
New York, NY 10027
United States

William P. Bottom

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-6351 (Phone)
314-935-6359 (Fax)

HOME PAGE: http://www.olin.wustl.edu/faculty/bottom.html

Paper statistics

Downloads
47
Abstract Views
331