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Prospect relativity: how choice options influence decision under risk.

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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

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Official URL: http://dx.doi.org/10.1037/0096-3445.132.1.23

Abstract

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
ISSN:	0096-3445
Date:	March 2003
Volume:	Vol.132
Number:	No.1
Page Range:	pp. 23-46
Identification Number:	10.1037/0096-3445.132.1.23
Status:	Peer Reviewed
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)
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URI:	http://wrap.warwick.ac.uk/id/eprint/620