COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 1526

Randomized Sign Test for Dependent Observations
on Discrete Choice under Risk

Anat Bracha, Jeremy Gray, Rustam Ibragimov, Boaz Nadler,
Dmitry Shapiro, Glena Ames and Donald Brown

June 2005

This paper proposes nonparametric statistical procedures for analyzing discrete choice models of affective decision making. We make two contributions to the literature on behavioral economics. Namely, we propose a procedure for eliciting the existence of a Nash equilibrium in an intrapersonal, potential game as well as randomized sign tests for dependent observations on game-theoretic models of affective decision making. This methodology is illustrated in the context of a hypothetical experiment -- the Casino Game.

Keywords: Behavioral economics, Affective decision making, Intrapersonal potential games, Randomized sign tests, Dependent observations, Adapted sequences, Martingale-difference sequences

JEL Classification: C12, C32, C35, C72, C91, D11, D81