Powered by OpenAIRE graph
Found an issue? Give us feedback
image/svg+xml Jakob Voss, based on art designer at PLoS, modified by Wikipedia users Nina and Beao Closed Access logo, derived from PLoS Open Access logo. This version with transparent background. http://commons.wikimedia.org/wiki/File:Closed_Access_logo_transparent.svg Jakob Voss, based on art designer at PLoS, modified by Wikipedia users Nina and Beao Journal of Economic ...arrow_drop_down
image/svg+xml Jakob Voss, based on art designer at PLoS, modified by Wikipedia users Nina and Beao Closed Access logo, derived from PLoS Open Access logo. This version with transparent background. http://commons.wikimedia.org/wiki/File:Closed_Access_logo_transparent.svg Jakob Voss, based on art designer at PLoS, modified by Wikipedia users Nina and Beao
Journal of Economic Psychology
Article . 2007 . Peer-reviewed
License: Elsevier TDM
Data sources: Crossref
https://dx.doi.org/10.71889/5f...
Other literature type . 2025
Data sources: Datacite
https://dx.doi.org/10.71889/5f...
Other literature type . 2025
Data sources: Datacite
versions View all 3 versions
addClaim

This Research product is the result of merged Research products in OpenAIRE.

You have already added 0 works in your ORCID record related to the merged Research product.

Rationality crossovers

Authors: Cherry, Todd L.; Shogren, Jason F.;

Rationality crossovers

Abstract

Herein we further explore whether the power of arbitrage to induce people to exhibit more rational behavior extends to diverse decision-making tasks and stated valuation over preferences for gambles. We examine how arbitrage in a preference reversal setting affects behavior for the valuation of low probability food safety risks, the Allais Paradox, and the Ellsberg paradox. We design a three-stage experiment that elicits choices and values over gambles, with and without the experience of arbitrage. Our results suggest that a rationality crossover can exist – arbitrage in one setting can cross-over to affect the choices in unrelated tasks. Stated values for safer food dropped by 20–50%, and the frequency of the Allais paradox is cut in half. People acted more rationally by reducing their stated value for a lottery, or if monetary adjustments are impossible they adjust their choice away from the lottery. Rationality crossovers have their predicted limits in that the frequency of the Ellsberg paradox, the most distinct decision environment, remained the same. We also found that the form of arbitrage as captured by stricter real market-like experience or a weaker version of cheap-talk (i.e., hypothetical) arbitrage did not affect the results. This paper shows that arbitrage-induced rationality can transfer across contexts.

  • BIP!
    Impact byBIP!
    selected citations
    These citations are derived from selected sources.
    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    26
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Average
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Top 10%
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Top 10%
Powered by OpenAIRE graph
Found an issue? Give us feedback
selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
26
Average
Top 10%
Top 10%
Upload OA version
Are you the author of this publication? Upload your Open Access version to Zenodo!
It’s fast and easy, just two clicks!