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Flipping a Coin: Theory and Evidence

44 Pages Posted: 12 Nov 2013  

Nadja Dwenger

Max Planck Institute for Tax Law and Public Finance

Dorothea Kübler

Social Science Research Center (WZB); Technische Universität Berlin (TU Berlin) - Faculty of Economics and Management

Georg Weizsacker

Humboldt University Berlin; DIW Berlin

Date Written: November 12, 2013

Abstract

We investigate the possibility that a decision-maker prefers to avoid making a decision and instead delegates it to an external device, e.g., a coin flip. In a series of experiments the participants often choose lotteries between allocations, which contradicts most theories of choice such as expected utility but is consistent with a theory of responsibility aversion that implies a preference for randomness. A large data set on university applications in Germany shows a choice pattern that is also consistent with this theory and entails substantial allocative consequences.

Keywords: preference for randomization, menu-dependent preference, individual decision making, university choice, matching

JEL Classification: D03, D01

Suggested Citation

Dwenger, Nadja and Kübler, Dorothea and Weizsacker, Georg, Flipping a Coin: Theory and Evidence (November 12, 2013). Available at SSRN: https://ssrn.com/abstract=2353282 or http://dx.doi.org/10.2139/ssrn.2353282

Nadja Dwenger

Max Planck Institute for Tax Law and Public Finance ( email )

10117
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/public_economics/public_economics_people/dwenger_nadja.cfm

Dorothea F. Kübler

Social Science Research Center (WZB) ( email )

Reichpietschufer 50
D-10785 Berlin, 10785
Germany
40 30 25491440 (Phone)

HOME PAGE: http://www.wzb.eu/mp/vam/people/dorothea_kuebler.de.htm

Technische Universität Berlin (TU Berlin) - Faculty of Economics and Management ( email )

D-10623 Berlin
Germany
+49 30 31425263 (Phone)

HOME PAGE: http://www.wiwi-experimente.tu-berlin.de/

Georg Weizsacker (Contact Author)

Humboldt University Berlin ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

DIW Berlin

Mohrenstr. 58
Berlin
Germany

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