An Experimental Test of a General Class of Utility Models: Evidence for Context Dependency

Abstract

Generic utility theory, a general axiomatization of utility principles developed by Miyamoto (1988; 1992), is discussed as a formulation that captures a large class of utility theories. Several general mathematical functions were used to specify further the scaling of utility within this class of models. The scaling parameters in the generic utility representation should remain invariant across gambling contexts, and this predicted invariance provided a means for testing the theory. Evidence is presented that the prediction of scaling-parameter invariance is violated. This failure is interpreted as a consequence of employing an absolute reference system for a problem that is context-sensitive.

JEL Classification: C20, D81, C91