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Contingent Weighting in Judgment and Choice

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Abstract

Preference can be inferred from direct choice between options or from a matching procedure in which the decision maker adjusts one option to match another. Studies of preferences between two-dimensional options (e.g., public policies, job applicants, benefit plans) show that the more prominent dimension looms larger in choice than in matching. Thus, choice is more lexicographic than matching. This finding is viewed as an instance of a general principle of compatibility: The weighting of inputs is enhanced by their compatibility with the output. To account for such effects, we develop a hierarchy of models in which the trade-off between attributes is contingent on the nature of the response. The simplest theory of this type, called the contingent weighting model, is applied to the analysis of various compatibility effects, including the choice-matching discrepancy and the preference-reversal phenomenon. These results raise both conceptual and practical questions concerning the nature, the meaning and the assessment of preference. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Psychological
Review
1988,
Vol.
95, No.
3,371-38'
Copyright
1988
by the
American
Psychological
Association,
Inc.
0033-295X/88/S00.75
Contingent
Weighting
in
Judgment
and
Choice
Amos
Tversky
Shmuel
Sattath
Stanford
University Hebrew
University,
Jerusalem,
Israel
Paul
Slovic
Decision
Research,
Eugene, Oregon
and
University
of
Oregon
Preference
can be
inferred
from
direct choice between options
or
from
a
matching procedure
in
which
the
decision maker
adjusts
one
option
to
match another. Studies
of
preferences
between
two-
dimensional
options (e.g., public policies,
job
applicants,
benefit
plans)
show
that
the
more promi-
nent
dimension looms larger
in
choice than
in
matching. Thus, choice
is
more lexicographic than
matching. This
finding is
viewed
as an
instance
of a
general principle
of
compatibility:
The
weighting
of
inputs
is
enhanced
by
their compatibility with
the
output.
To
account
for
such
effects,
we
develop
a
hierarchy
of
models
in
which
the
trade-off
between
attributes
is
contingent
on the
nature
of the
response.
The
simplest theory
of
this type, called
the
contingent weighting model,
is
applied
to
the
analysis
of
various compatibility
effects,
including
the
choice-matching discrepancy
and the
preference-reversal
phenomenon. These results raise both conceptual
and
practical questions
con-
cerning
the
nature,
the
meaning
and the
assessment
of
preference.
The
relation
of
preference
between acts
or
options
is the key
element
of
decision theory that provides
the
basis
for the
mea-
surement
of
utility
or
value.
In
axiomatic treatments
of
decision
theory,
the
concept
of
preference
appears
as an
abstract
relation
that
is
given
an
empirical interpretation through
specific
meth-
ods of
elicitation,
such
as
choice
and
matching.
In
choice
the
decision maker
selects
an
option
from
an
offered
set of two or
more alternatives.
In
matching
the
decision
maker
is
required
to
set the
value
of
some variable
in
order
to
achieve
an
equivalence
between
options (e.g., what chance
to win
$750
is as
attractive
as 1
chance
in 10 to win
$2,500?).
The
standard analysis
of
choice assumes procedure invari-
ance: Normatively equivalent procedures
for
assessing
prefer-
ences should
give
rise
to the
same preference order. Indeed, the-
ories
of
measurement generally require
the
ordering
of
objects
to be
independent
of the
particular method
of
assessment.
In
classical
physical
measurement,
it is
commonly assumed that
each
object possesses
a
well-defined
quantity
of the
attribute
in
question (e.g., length, mass)
and
that
different
measurement
procedures elicit
the
same ordering
of
objects
with
respect
to
this
attribute. Analogously,
the
classical theory
of
preference
assumes
that
each individual
has a
well-defined
preference
or-
der (or a
utility
function)
and
that
different
methods
of
elicita-
tion
produce
the
same ordering
of
options.
To
determine
the
heavier
of two
objects,
for
example,
we can
place them
on the
two
sides
of a pan
balance
and
observe which side goes down.
Alternatively,
we can
place each object separately
on a
sliding
scale
and
observe
the
position
at
which
the
sliding scale
is
bal-
anced. Similarly,
to
determine
the
preference order between
op-
tions
we can use
either choice
or
matching.
Note
that
the pan
This
work
was
supported
by
Contract
N00014-84-K-0615
from
the
Office
of
Naval
Research
to
Stanford University
and by
National
Sci-
ence
Foundation
Grant
5ES-8712-145
to
Decision Research.
The
article
has
benefited
from
discussions with Greg Fischer, Dale
Griffin,
Eric Johnson, Daniel
Kahneman,
and
Lcnnart
Sjtiberg.
balance
is
analogous
to
binary choice, whereas
the
sliding scale
resembles matching.
The
assumption
of
procedure invariance
is
likely
to
hold
when
people have well-articulated preferences
and
beliefs,
as is
commonly assumed
in the
classical theory.
If one
likes opera
but not
ballet,
for
example, this preference
is
likely
to
emerge
regardless
of
whether
one
compares
the two
directly
or
evalu-
ates them independently. Procedure invariance
may
hold
even
in
the
absence
of
precomputed
preferences,
if
people
use a
con-
sistent algorithm.
We do not
immediately
know
the
value
of
7(8 + 9), but we
have
an
algorithm
for
computing
it
that yields
the
same
answer
regardless
of
whether
the
addition
is
performed
before
or
after
the
multiplication. Similarly, procedure invari-
ance
is
likely
to be
satisfied
if the
value
of
each option
is
com-
puted
by a
well-defined
criterion, such
as
expected utility.
Studies
of
decision
and
judgment,
however,
indicate
that
the
foregoing
conditions
for
procedure invariance
are not
generally
true
and
that people
often
do not
have
well-defined
values
and
beliefs
(e.g.,
Fischhoff,
Slovic
&
Lichtenstein,
1980; March,
1978;
Shafer
&
Tversky, 1985).
In
these situations, observed
preferences
are not
simply
read
off
from
some master list; they
are
actually constructed
in the
elicitation
process.
Furthermore,
choice
is
contingent
or
context sensitive:
It
depends
on the
fram-
ing
of the
problem
and on the
method
of
elicitation (Payne,
1982;
Slovic
&
Lichtenstein, 1983; Tversky
&
Kahneman,
1986).
Different
elicitation procedures highlight
different
as-
pects
of
options
and
suggest alternative heuristics, which
may
give
rise
to
inconsistent responses.
An
adequate account
of
choice,
therefore,
requires
a
psychological analysis
of
the
elicita-
tion
process
and its
effect
on the
observed response.
What
are the
differences
between
choice
and
matching,
and
how
do
they
affect
people's responses? Because
our
understand-
ing
of the
mental processes involved
is
limited,
the
analysis
is
necessarily sketchy
and
incomplete. Nevertheless, there
is
rea-
son
to
expect
that
choice
and
matching
may
differ
in a
predict-
able
manner. Consider
the
following
example. Suppose Joan
371
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Revealed preferences between alternatives can be systematically reversed across a variety of elicitation procedures (e.g., choice, valuation, matching, joint/separate evaluation). These puzzling findings have been usually invoked to challenge the procedure invariance principle. Yet procedure-dependent preferences can be endogenous. This paper presents a unifying theory of contextual deliberation to account for seemingly disparate phenomena of preference reversals. When attribute importance is ex ante imperfectly known, people can engage in costly information retrieval/acquisition activities (i.e., deliberation) prior to making decisions. Elicitation procedures can influence revealed preferences through affecting the incentive for deliberation. Therefore, contextual deliberation can endogenously yield procedure-dependent preference reversals, offer a common microfoundation for extant psychological accounts (e.g., the prominence hypothesis, the evaluability hypothesis), and coherently organize apparently unrelated/inconsistent findings in the literature. We also run five experiments and document new findings that are inconsistent with extant hypotheses but can be reconciled by contextual deliberation. This paper was accepted by Dmitri Kuksov, marketing. Funding: This work was supported by the Hong Kong Research Grant Council (RGC) General Research Fund [Grant 16500614]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2021.02640 .
Chapter
One of the main themes that has emerged from behavioral decision research during the past three decades is the view that people's preferences are often constructed in the process of elicitation. This idea is derived from studies demonstrating that normatively equivalent methods of elicitation (e.g., choice and pricing) give rise to systematically different responses. These preference reversals violate the principle of procedure invariance that is fundamental to all theories of rational choice. If different elicitation procedures produce different orderings of options, how can preferences be defined and in what sense do they exist? This book shows not only the historical roots of preference construction but also the blossoming of the concept within psychology, law, marketing, philosophy, environmental policy, and economics. Decision making is now understood to be a highly contingent form of information processing, sensitive to task complexity, time pressure, response mode, framing, reference points, and other contextual factors.
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Many decisions are based on beliefs concerning the likelihood of uncertain events such as the outcome of an election, the guilt of a defendant, or the future value of the dollar. Occasionally, beliefs concerning uncertain events are expressed in numerical form as odds or subjective probabilities. In general, the heuristics are quite useful, but sometimes they lead to severe and systematic errors. The subjective assessment of probability resembles the subjective assessment of physical quantities such as distance or size. These judgments are all based on data of limited validity, which are processed according to heuristic rules. However, the reliance on this rule leads to systematic errors in the estimation of distance. This chapter describes three heuristics that are employed in making judgments under uncertainty. The first is representativeness, which is usually employed when people are asked to judge the probability that an object or event belongs to a class or event. The second is the availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development, and the third is adjustment from an anchor, which is usually employed in numerical prediction when a relevant value is available.
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We discuss the cognitive and the psy- chophysical determinants of choice in risky and risk- less contexts. The psychophysics of value induce risk aversion in the domain of gains and risk seeking in the domain of losses. The psychophysics of chance induce overweighting of sure things and of improbable events, relative to events of moderate probability. De- cision problems can be described or framed in multiple ways that give rise to different preferences, contrary to the invariance criterion of rational choice. The pro- cess of mental accounting, in which people organize the outcomes of transactions, explains some anomalies of consumer behavior. In particular, the acceptability of an option can depend on whether a negative outcome is evaluated as a cost or as an uncompensated loss. The relation between decision values and experience values is discussed. Making decisions is like speaking prose—people do it all the time, knowingly or unknowingly. It is hardly surprising, then, that the topic of decision making is shared by many disciplines, from mathematics and statistics, through economics and political science, to sociology and psychology. The study of decisions ad- dresses both normative and descriptive questions. The normative analysis is concerned with the nature of rationality and the logic of decision making. The de- scriptive analysis, in contrast, is concerned with peo- ple's beliefs and preferences as they are, not as they should be. The tension between normative and de- scriptive considerations characterizes much of the study of judgment and choice. Analyses of decision making commonly distin- guish risky and riskless choices. The paradigmatic example of decision under risk is the acceptability of a gamble that yields monetary outcomes with specified probabilities. A typical riskless decision concerns the acceptability of a transaction in which a good or a service is exchanged for money or labor. In the first part of this article we present an analysis of the cog- nitive and psychophysical factors that determine the value of risky prospects. In the second part we extend this analysis to transactions and trades. Risky Choice Risky choices, such as whether or not to take an umbrella and whether or not to go to war, are made without advance knowledge of their consequences. Because the consequences of such actions depend on uncertain events such as the weather or the opponent's resolve, the choice of an act may be construed as the acceptance of a gamble that can yield various out- comes with different probabilities. It is therefore nat- ural that the study of decision making under risk has focused on choices between simple gambles with monetary outcomes and specified probabilities, in the hope that these simple problems will reveal basic at- titudes toward risk and value. We shall sketch an approach to risky choice that