Money makes the world go round, and basic research can help
As the adage goes, “money makes the world go round” – but which direction does it spin? This analysis considers how basic decision research can help us work out how to answer this question. It suggests that the difficulty of deriving clear predictions based on existing decision research is at least...
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| Format: | Article |
| Language: | English |
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Cambridge University Press
2020-05-01
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| Series: | Judgment and Decision Making |
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| Online Access: | https://www.cambridge.org/core/product/identifier/S1930297500007129/type/journal_article |
| _version_ | 1797696026053705728 |
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| author | Ido Erev |
| author_facet | Ido Erev |
| author_sort | Ido Erev |
| collection | DOAJ |
| description | As the adage goes, “money makes the world go round” – but which direction does it spin? This analysis considers how basic decision research can help us work out how to answer this question. It suggests that the difficulty of deriving clear predictions based on existing decision research is at least partly rooted in two restrictive conventions. The first is the focus on deviations from rational choice, and the effort to capture observed deviations by assuming subjective value functions. While it is difficult to reject the hypothesis that choice behavior reflects the weighting of subjective values, it is not clear that it advances the derivation of useful predictions. A second restrictive convention is the focus on objective hypothesis testing, which favors analyses that evaluate small refinements of the popular models. The potential benefits of relaxing these conventions are considered, with reference to recent choice prediction competitions that facilitate the exploration of distinct assumptions and model development techniques. The winners in these competitions assume very different decision processes than those assumed by the popular “subjective functions” models. The relationship of the results to the big data revolution is discussed. |
| first_indexed | 2024-03-12T03:20:38Z |
| format | Article |
| id | doaj.art-f17344903f74416e8eeb3990cc2a4031 |
| institution | Directory Open Access Journal |
| issn | 1930-2975 |
| language | English |
| last_indexed | 2024-03-12T03:20:38Z |
| publishDate | 2020-05-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Judgment and Decision Making |
| spelling | doaj.art-f17344903f74416e8eeb3990cc2a40312023-09-03T14:02:50ZengCambridge University PressJudgment and Decision Making1930-29752020-05-011530431010.1017/S1930297500007129Money makes the world go round, and basic research can helpIdo Erev0https://orcid.org/0000-0001-9889-4070Faculty of Industrial Engineering and Management, Technion – Israel Institute of TechnologyAs the adage goes, “money makes the world go round” – but which direction does it spin? This analysis considers how basic decision research can help us work out how to answer this question. It suggests that the difficulty of deriving clear predictions based on existing decision research is at least partly rooted in two restrictive conventions. The first is the focus on deviations from rational choice, and the effort to capture observed deviations by assuming subjective value functions. While it is difficult to reject the hypothesis that choice behavior reflects the weighting of subjective values, it is not clear that it advances the derivation of useful predictions. A second restrictive convention is the focus on objective hypothesis testing, which favors analyses that evaluate small refinements of the popular models. The potential benefits of relaxing these conventions are considered, with reference to recent choice prediction competitions that facilitate the exploration of distinct assumptions and model development techniques. The winners in these competitions assume very different decision processes than those assumed by the popular “subjective functions” models. The relationship of the results to the big data revolution is discussed.https://www.cambridge.org/core/product/identifier/S1930297500007129/type/journal_articlemethodologysubjective valuemodel developmentprediction competitions |
| spellingShingle | Ido Erev Money makes the world go round, and basic research can help Judgment and Decision Making methodology subjective value model development prediction competitions |
| title | Money makes the world go round, and basic research can help |
| title_full | Money makes the world go round, and basic research can help |
| title_fullStr | Money makes the world go round, and basic research can help |
| title_full_unstemmed | Money makes the world go round, and basic research can help |
| title_short | Money makes the world go round, and basic research can help |
| title_sort | money makes the world go round and basic research can help |
| topic | methodology subjective value model development prediction competitions |
| url | https://www.cambridge.org/core/product/identifier/S1930297500007129/type/journal_article |
| work_keys_str_mv | AT idoerev moneymakestheworldgoroundandbasicresearchcanhelp |