New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splitting
Previous tests of cumulative prospect theory (CPT) and of the priority heuristic (PH) found evidence contradicting these two models of risky decision making. However, those tests were criticized because they had characteristics that might “trigger” use of other heuristics. This paper presents new te...
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| Format: | Article |
| Language: | English |
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Cambridge University Press
2008-04-01
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| Series: | Judgment and Decision Making |
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| Online Access: | https://www.cambridge.org/core/product/identifier/S1930297500000875/type/journal_article |
| _version_ | 1797695971904192512 |
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| author | Michael H. Birnbaum |
| author_facet | Michael H. Birnbaum |
| author_sort | Michael H. Birnbaum |
| collection | DOAJ |
| description | Previous tests of cumulative prospect theory (CPT) and of the priority heuristic (PH) found evidence contradicting these two models of risky decision making. However, those tests were criticized because they had characteristics that might “trigger” use of other heuristics. This paper presents new tests that avoid those characteristics. Expected values of the gambles are nearly equal in each choice. In addition, if a person followed expected value (EV), expected utility (EU), CPT, or PH in these tests, she would shift her preferences in the same direction as shifts in EV or EU. In contrast, the transfer of attention exchange model (TAX) and a similarity model predict that people will reverse preferences in the opposite direction. Results contradict the PH, even when PH is modified to include a preliminary similarity evaluation using the PH parameters. New tests of probability-consequence interaction were also conducted. Strong interactions were observed, contrary to PH. These results add to the growing bodies of evidence showing that neither CPT nor PH is an accurate description of risky decision making. |
| first_indexed | 2024-03-12T03:19:59Z |
| format | Article |
| id | doaj.art-3b491cae3ce74f229fc970e390b5ae68 |
| institution | Directory Open Access Journal |
| issn | 1930-2975 |
| language | English |
| last_indexed | 2024-03-12T03:19:59Z |
| publishDate | 2008-04-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Judgment and Decision Making |
| spelling | doaj.art-3b491cae3ce74f229fc970e390b5ae682023-09-03T14:02:37ZengCambridge University PressJudgment and Decision Making1930-29752008-04-01330431610.1017/S1930297500000875New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splittingMichael H. Birnbaum0Decision Research Center, California State University at FullertonPrevious tests of cumulative prospect theory (CPT) and of the priority heuristic (PH) found evidence contradicting these two models of risky decision making. However, those tests were criticized because they had characteristics that might “trigger” use of other heuristics. This paper presents new tests that avoid those characteristics. Expected values of the gambles are nearly equal in each choice. In addition, if a person followed expected value (EV), expected utility (EU), CPT, or PH in these tests, she would shift her preferences in the same direction as shifts in EV or EU. In contrast, the transfer of attention exchange model (TAX) and a similarity model predict that people will reverse preferences in the opposite direction. Results contradict the PH, even when PH is modified to include a preliminary similarity evaluation using the PH parameters. New tests of probability-consequence interaction were also conducted. Strong interactions were observed, contrary to PH. These results add to the growing bodies of evidence showing that neither CPT nor PH is an accurate description of risky decision making.https://www.cambridge.org/core/product/identifier/S1930297500000875/type/journal_articlechoicecumulative prospect theorydecision makinglexicographic semiorderpriority heuristicprospect theoryutility |
| spellingShingle | Michael H. Birnbaum New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splitting Judgment and Decision Making choice cumulative prospect theory decision making lexicographic semiorder priority heuristic prospect theory utility |
| title | New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splitting |
| title_full | New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splitting |
| title_fullStr | New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splitting |
| title_full_unstemmed | New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splitting |
| title_short | New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splitting |
| title_sort | new tests of cumulative prospect theory and the priority heuristic probability outcome tradeoff with branch splitting |
| topic | choice cumulative prospect theory decision making lexicographic semiorder priority heuristic prospect theory utility |
| url | https://www.cambridge.org/core/product/identifier/S1930297500000875/type/journal_article |
| work_keys_str_mv | AT michaelhbirnbaum newtestsofcumulativeprospecttheoryandthepriorityheuristicprobabilityoutcometradeoffwithbranchsplitting |