Date: April 13th, 2023 (12:30 pm – 1:30 pm)

Speaker: Severine Toussaert

Paper Title: “Stochastic dominance and preference for randomization”

Abstract: Decision theorists usually take a normative view on stochastic dominance: a decision maker who chooses a lottery that puts more weight on options he likes less must be making a mistake. In this project I argue that stochastic dominance violations may naturally occur in situations where anticipatory utility is high, such as going on a holiday trip. In such a situation, the decision maker may trade the certainty of going to his favorite destination for the excitement of not knowing where he will go. To document this phenomenon, I conduct an experiment in which participants make a series of binary choices between a sure destination and a lottery over holiday trips. The outcome of the lottery is revealed close to the date of travel. I vary the characteristics of the lotteries to understand when violations of stochastic dominance are most likely to occur and analyze their properties. I discuss the implications for the modelling of anticipatory utility.  

Bio: Séverine Toussaert is an Associate Professor at the Department of Economics of the University of Oxford. She obtained her PhD from NYU in 2016. Her research combines theory, lab and field data to shed light on the non-material costs and benefits that may enter a decision maker’s utility function such as the self-control cost of avoiding temptation. Several applications she has worked on cover health topics, including smoking cessation and diet choices.