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Preference Reversal And The Independence Axiom, Dan Adelman
Preference Reversal And The Independence Axiom, Dan Adelman
Honors Papers
In his article "Dynamic Consistency and Non-Expected Utility Models of Choice Under Uncertainty," (Journal of Economic Literature, Dec. 1989), Mark Machina asserted that preference reversal (PR) is caused by a violation of the independence axiom. Amos Tversky, Paul Slovic, and Daniel Kahneman submit, however, that "Observed preference reversal ... cannot be adequately explained by violations of independence...." This paper tests these claims by breaking the independence axiom into its two component parts: mixture and replacement separability.