Posterior Probabilities of the independence axiom with nonexperimental data (Or buckle up and fan out)

Robert C. Marshall, Jean Francois Richard, Gary A. Zarkin

Research output: Contribution to journalComment/debate

Abstract

This article addresses the issues associated with the construction of posterior probabilities for violation of the independence axiom of expected utility from nonexperimental data. To illustrate the methodology of analyzing nonexperimental evidence, we consider seat-belt-usage data. We find a posterior probability close to one of an Allais-type paradox in these data. In addition, the evidence is not inconsistent with Machina’s Hypothesis II but is inconsistent with the “light” hypothesis of Chew and Waller.

Original languageEnglish (US)
Pages (from-to)31-44
Number of pages14
JournalJournal of Business and Economic Statistics
Volume10
Issue number1
DOIs
StatePublished - Jan 1992

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All Science Journal Classification (ASJC) codes

  • Statistics and Probability
  • Social Sciences (miscellaneous)
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty

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