An Experimental Test of Event Commutativity in Decision Making Under Uncertainty

A fundamental rationality assumption of many models of choices under risk and uncertainty is that the sequencing of events should not matter to a decision maker so long as the consequences arise under the same conditions, ignoring the order of events Subjective expected utility (SEU) implies this property without exception, however, SEU is known not to be descriptive The boundary between SEU and potentially more descriptive theories, such as the rank-dependent ones, has been shown to lie at a very simple version of this property called event commutativity Two previous tests of it have yielded mixed results (Brothers, 1990, Ronen, 1973), but with some evidence from Brothers that it may be sustained if choice-based certainty equivalents are used The present study tested event commutativity using a version of the sequential choice procedure Brothers employed in his third experiment Twenty-four gambles representing a scenario of suing versus settling a car-accident dispute were presented to students, and certainty equivalents (settlement amounts) were elicited using a computer-controlled choice procedure Twenty-two of 25 subjects supported the property of event commutativity, the others violated it in ways similar to those discovered in the earlier studies