Prospect relativity: how choice options influence decision under risk.
Stewart, Neil, 1974-, Chater, Nick, Stott , Henry P. and Reimers, Stian. (2003) Prospect relativity: how choice options influence decision under risk. Journal of Experimental Psychology: General, Vol.132 (No.1). pp. 23-46. ISSN 0096-3445
WRAP_STewart_prospect_relativity.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Official URL: http://dx.doi.org/10.1037/0096-34220.127.116.11
In many theories of decision under risk (e.g., expected utility theory, rank-dependent utility theory, and prospect theory), the utility of a prospect is independent of other options in the choice set. The experiments presented here show a large effect of the available options, suggesting instead that prospects are valued relative to one another. The judged certainty equivalent for a prospect is strongly influenced by the options available. Similarly, the selection of a preferred prospect is strongly influenced by the prospects available. Alternative theories of decision under risk (e.g., the stochastic difference model, multialternative decision field theory, and range frequency theory), where prospects are valued relative to one another, can provide an account of these context effects.
|Item Type:||Journal Article|
|Subjects:||B Philosophy. Psychology. Religion > BF Psychology|
|Divisions:||Faculty of Science > Psychology|
|Library of Congress Subject Headings (LCSH):||Choice (Psychology), Risk -- Decision making, Decision making -- Testing, Multiple criteria decision making|
|Journal or Publication Title:||Journal of Experimental Psychology: General|
|Publisher:||American Psychological Association|
|Official Date:||March 2003|
|Page Range:||pp. 23-46|
|Access rights to Published version:||Open Access|
|Funder:||Economic and Social Research Council (Great Britain) (ESRC), Oliver, Wyman & Company (OWCo.), European Commission (EC)|
|Grant number:||R000239351 (ESRC), RTN-HPRN-CT-1999-00065 (EC)|
1. Akerlof, G. & Yellen, J. (1985). Can small deviations from rationality make significant differences to economic equilibria. The American Economic Review, 75, 708-720.
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