Revealed Incomplete Preferences

TL;DR

This paper investigates incomplete preferences over monetary gambles, finding that a significant portion of subjects exhibit incompleteness mainly due to imprecise tastes, with implications for preference elicitation methods.

Contribution

It introduces a method to estimate preferences from incomplete rankings and reveals the prevalence and sources of incompleteness in preferences.

Findings

Approximately 40% of subjects show incompleteness in preferences.

Incompleteness is similar across individuals with different belief precisions.

Forcing choices increases inconsistencies and preference reversals.

Abstract

We elicit incomplete preferences over monetary gambles with subjective uncertainty. Subjects rank gambles, and these rankings are used to estimate preferences; payments are based on estimated preferences. About 40\% of subjects express incompleteness, but they do so infrequently. Incompleteness is similar for individuals with precise and imprecise beliefs, and in an environment with objective uncertainty, suggesting that it results from imprecise tastes more than imprecise beliefs. When we force subjects to choose, we observe more inconsistencies and preference reversals. Evidence suggests there is incompleteness that is indirectly revealed -- in up to 98\% of subjects -- in addition to what we directly measure.