The Disjunction Effect: Does It Exist for Two-Step Gambles?

One of the basic axioms of the rational theory of decision under uncertainty is Savage's (1954) Sure Thing Principle. It states that if Prospect x is preferred to Prospect y knowing that Event A occurred, and if x is preferred to y knowing that A did not occur, then x should also be preferred to y when it is not known whether A occurred. Tversky and Shafir (1992) claim to have demonstrated a violation of this principle in two-step gambles, which is termed a disjunction effect. The present article evaluates the replicability of the disjunction effect for two-step gambles. The findings show that people do not violate the sure thing principle in repeated gambles. The validity of alleged violations in other paradigms is discussed. Copyright 2001 Academic Press.