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Investigation of the Stochastic Choice under Risk using Experimental Data

Gadjah Mada International Journal of Business (GamaIJB) · Vol. 22 No. 2 (2020) · pp. 137–150

DOI
10.22146/gamaijb.34446
ISSN
2338-7238, 1411-1128
Published
2020-08-30
Publisher
Master in Management, Faculty of Economics and Business, Universitas Gadjah Mada
Language
eng
License
creativecommons.org/licenses/by-sa/4.0

Abstract

This paper extends the analysis of the data from the experiment undertaken by Pradiptyo et al. (2015), to help explain the subjects’ behaviour when making decisions under risk. This study specifically investigates the relative empirical performance of the two general models of the stochastic choice: the random utility model (RUM) and the random preference model (RPM) where this paper specifies these models using two preference functionals, expected utility (EU) and rank-dependent expected utility (RDEU). The parameters are estimated in each model using a maximum likelihood technique and run a horse-race using the goodness-of-fit between the models. The results show that the RUM better explains the subjects’ behaviour in the experiment. Additionally, the RDEU fits better than the EU for modelling the stochastic choice.

Keywords

Collaboration network of the authors

5 authors · 6 co-authorship links · 2 across different organisations

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  • Universitas Gadjah Mada
  • Boston University
  • Different organisations
  • Same organisation
  • Affiliation unknown
  • Thicker line = more joint articles · bigger circle = more articles
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Co-authorOrganisationJoint articles
Gumilang Aryo SahadewoBoston University1
Bernardinus Maria PurwantoUniversitas Gadjah Mada1

Affiliations come from OpenAlex; journal OAI-PMH metadata carries none. Authors without an OpenAlex ID are matched by name, which can merge or split people.

Metadata source: OAI-PMH (metadata jurnal) https://journal.ugm.ac.id/gamaijb/oai, first harvested 28 Okt 2026, last seen 1 Nov 2026.
Original metadata (oai_dc) 
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	<dc:title xml:lang="en-US">Investigation of the Stochastic Choice under Risk   using Experimental Data</dc:title>
	<dc:creator>Permana, Yudistira</dc:creator>
	<dc:creator>van Empel, Giovanni</dc:creator>
	<dc:creator>Pradiptyo, Rimawan</dc:creator>
	<dc:subject xml:lang="en-US">Economics; Experimental Economics</dc:subject>
	<dc:subject xml:lang="en-US">Stochastic choice, expected utility, rank-dependent expected utility, maximum likelihood, lab experiment, risk</dc:subject>
	<dc:subject xml:lang="en-US">C91, D81</dc:subject>
	<dc:description xml:lang="en-US">This paper extends the analysis of the data from the experiment undertaken by Pradiptyo et al. (2015), to help explain the subjects’ behaviour when making decisions under risk. This study specifically investigates the relative empirical performance of the two general models of the stochastic choice: the random utility model (RUM) and the random preference model (RPM) where this paper specifies these models using two preference functionals, expected utility (EU) and rank-dependent expected utility (RDEU). The parameters are estimated in each model using a maximum likelihood technique and run a horse-race using the goodness-of-fit between the models. The results show that the RUM better explains the subjects’ behaviour in the experiment. Additionally, the RDEU fits better than the EU for modelling the stochastic choice. </dc:description>
	<dc:publisher xml:lang="en-US">Master in Management, Faculty of Economics and Business, Universitas Gadjah Mada</dc:publisher>
	<dc:contributor xml:lang="en-US"></dc:contributor>
	<dc:date>2020-08-30</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en-US">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://journal.ugm.ac.id/gamaijb/article/view/34446</dc:identifier>
	<dc:identifier>10.22146/gamaijb.34446</dc:identifier>
	<dc:source xml:lang="en-US">Gadjah Mada International Journal of Business; Vol 22, No 2 (2020): May-August; 137-150</dc:source>
	<dc:source>2338-7238</dc:source>
	<dc:source>1411-1128</dc:source>
	<dc:language>eng</dc:language>
	<dc:relation>https://journal.ugm.ac.id/gamaijb/article/view/34446/28844</dc:relation>
	<dc:rights xml:lang="en-US">Copyright (c) 2020 Gadjah Mada International Journal of Business</dc:rights>
	<dc:rights xml:lang="en-US">http://creativecommons.org/licenses/by-sa/4.0</dc:rights>
</oai_dc:dc>