The random thickness of indifference

Abstract

Standard random utility models can account for stochastic choice. However, a common implication is that the realized utilities are equal with probability zero. This knife-edge aspect implies that indifference is thin because arbitrarily small changes in utility will break indifference. Semiorders can represent preferences where indifference is thick, however, choice is not random. We design an incentivized binary line length judgment experiment to better understand how indifference can be both thick and random. In the 2-choice treatment, subjects select one of the lines. In the 3-choice treatment, subjects select one of the lines or can express indifference, which directs the computer to “flip a coin” to decide. In every trial, there is a longer line and subjects were told this fact. For each of our line pairs, subjects make 5 decisions in the 2-choice treatment and 5 decisions in the 3-choice treatment. In the line pair with the smallest length difference, 49.7% of 2-choice treatment trials are optimal. For this line pair in the 3-choice treatment, only 1 out of 113 subjects selected indifference on all 5 available trials. In the 3-choice treatment, we also find that indifference choices have longer response times than suboptimal choices. We find that indifference choices are correlated with a measure of risk aversion and a measure of the beliefs of the favorability of the coin flip. We hope that these results will prompt additional experimental and theoretical work on the random thickness of indifference.