title: Testing theories of financial decision making.
abstract: We describe the observable content of some of the most widely used models of decision under uncertainty: models of translation invariant preferences. In particular, we characterize the models of variational, maxmin, constant absolute risk aversion, and constant relative risk aversion utilities. In each case we present a revealed preference axiom that is satisfied by a dataset if and only if the dataset is consistent with the corresponding utility representation. We test our axioms using data from an experiment on financial decisions.
authors.affiliation: Department of Economics, University of California, San Diego, La Jolla, CA 92093;
authors.forename: Christopher P
authors.initials: CP
authors.lastname: Chambers
authors.affiliation: Division of the Humanities and Social Sciences, California Institute of Technology, Pasadena, CA 91125.
authors.forename: Federico
authors.initials: F
authors.lastname: Echenique
authors.affiliation: Division of the Humanities and Social Sciences, California Institute of Technology, Pasadena, CA 91125 saito@caltech.edu.
authors.forename: Kota
authors.initials: K
authors.lastname: Saito
keywords: homotheticity; revealed preference; translation invariance; uncertainty