Violation of the transitivity axiom may explain why, in empirical studies, a significant number of subjects violate GARP
Résumé
Most papers using experimental data find that a significant number of agents are not utility function maximizers. Using three experimental datasets, we provide empirical evidence that these violations of utility function maximizing behavior are simply generated by a violation of the preference transitivity axiom. Moreover, we find that 97% of agents' behavior is consistent with maximization of a generalized utility function called a variable intervals function (which corresponds to a numerical representation of complete-acyclic preferences).