1 Testing Expected Utility in the Presence of Errors*

One possible conclusion from recent experimental research on decision making under risk is that observed behaviour can be reasonably accommodated by expected utility plus error term. This conclusion implies that the violation rate of expected utility should decrease if errors are excluded. This paper reports on an experiment which investigates this implication by presenting the same choice problems to subjects three times. The results show that the exclusion of errors leads to a significant reduction of the violation rate for most of the subjects and most of the choice problems. This observation can be regarded as supporting evidence for expected utility plus error term