Reversals of preference between bids and choices in gambling decisions
Loading...
Date
1971
Authors
Slovic, Paul
Lichtenstein, Sarah
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Experimental Psycholog
Abstract
Subjects in 3 experiments chose their preferred bet from pairs of
bets, and later bid for each bet separately. In each pair, one bet had· a higher probability ·of winning (P bet); the other offered more to win
(S bet). Bidding method (selling vs. buying) and payoff method (real-play vs. hourly wage) were varied. Results showed that when the P bet was chosen, the$ bet oen received a higher bid. These inconsistencies violate every risky decision model, but can be understood via information-processing considerations. In bidding, S starts with amount to win and .adjusts it downward to account for other attributes of the bet. In choosing; there is no natural starting point. Thus amount to win dominates bids but not choices. One need not call this behavior irrational, but it casts doubt on the descriptive validity of expected utility models of risky decision making.
Description
30 pages
Keywords
Decision making, Game theory, Reaction(psychology), Mathematical models, Human performance, Probability, Uncertainty, Behavior, Reliability, Psychological tests
Citation
Lichtenstein, S., & Slovic, P. (1971). Reversals of preference between bids and choices in gambling decisions. Journal of Experimental Psychology, 89, 46-55.