DECISION-MAKING UNDER STRICT UNCERTAINTY - AN EXPERIMENTAL TEST OF COMPETITIVE CRITERIA

In decisions under strict uncertainty individual decision makers have to choose one of a finite number of alternatives with complete informa tion about their outcomes but in the absence of any information about the probabilities of the various states of nature. We report two exper iments with multiple decision tasks in which subjects were instructed to rank the alternatives (Experiment 1), or choose the best one (Exper iment 2). We test the major decision rules (criteria) which have been proposed for this case in the normative literature with special attent ion on Hurwicz's ''optimism-pessimism'' criterion which is the only on e that can accommodate individual differences. Although none of the cr iteria can account for the results of the majority of the subjects, ch oices made by a sizable minority of the subjects' are consistent with Hurwicz's model. There is no evidence for a systematic relationship be tween the model's single ''optimism-pessimism'' parameter (inferred fo rm choices) and, independently derived, individual measures of optimis m (obtained from responses to personality scales). We conclude with a discussion of the difficulty of experimentally implementing strict unc ertainty. (C) 1995 Academic Press, Inc.