Arbeitspapier
Strength of preference and decision making under risk
Influential economic approaches as random utility models or quantal-response equilibria assume a monotonic relation between error rates and choice difficulty or "strength of preference", in line with widespread evidence from discrimination tasks in psychology and neuroscience. However, while the latter define difficulty through objective dimensions (weight, length, etc), for economic decisions under risk the appropriate dimension remains unclear, with candidates including payoff-irrelevant numerical magnitudes. The very existence of the effects remains largely untested, because fitting models which assume such relations to data simply produces spurious findings. We provide a systematic empirical validation relying on two parsimonious experimental designs. Strength-of-preference effects are explained by expected values if objectively-correct answers exist, and by cardinal differences in independently-estimated utilities for preferential choices. Numerical magnitudes produce additional but minor effects. Finally, response times are inversely related to strength of preference, confirming that the observed relations are not "as if" explanations.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 330
- Classification
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Wirtschaft
Microeconomic Behavior: Underlying Principles
Criteria for Decision-Making under Risk and Uncertainty
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
- Subject
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stochastic choice
strength of preference
decision errors
risk attitude
choice difficulty
- Event
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Geistige Schöpfung
- (who)
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Alós-Ferrer, Carlos
Garagnani, Michele
- Event
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Veröffentlichung
- (who)
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University of Zurich, Department of Economics
- (where)
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Zurich
- (when)
-
2020
- DOI
-
doi:10.5167/uzh-172509
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Alós-Ferrer, Carlos
- Garagnani, Michele
- University of Zurich, Department of Economics
Time of origin
- 2020
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Preference Intensities in Repeated Collective Decision-Making
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Getting specific: participation preference in urooncological decision-making
Preference Communication and Leadership in Group Decision-Making
Heterogeneous Preference and Local Nonlinearity in Consensus Decision Making
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Robust Decision-Making under Risk and Ambiguity