Advanced Search
MyIDEAS: Login to save this article or follow this journal

Translation of Gambles and Aspiration Level Effects in Risky Choice Behavior


Author Info

  • John W. Payne

    (Duke University)

  • Dan J. Laughhunn

    (Duke University)

  • Roy Crum

    (University of Florida)

Registered author(s):


    Two recent models of risky decision making developed by Fishburn (Fishbijrn, P. C. 1977. Mean-risk analysis with risk associated with below-target returns. Amer. Econ. Rev. 67 116--126.) and by Kahneman and Tversky (Kahneman, D., A. Tversky. 1979. Prospect theory: an analysis of decisions under risk. Econometrica 47 262--291.) have emphasized the importance of a target return or a reference point in determining preferences and choices among gambles. Target returns and reference points represent variations on the concept of an aspiration level, an old idea in theories of decision making. Additional evidence on the need to incorporate such a concept in the analysis of risky choice behavior is presented in this paper. In three experiments, the relationship of pairs of gambles to an assumed reference point was varied by adding or subtracting a constant amount from all outcomes. The results demonstrate that such translations of outcomes can result in the reversal of choice within pairs of gambles. The effect of such translations on choice depended on whether the size of the translation was sufficient to insure that one gamble in a pair had outcome values either all above or all below the reference point, while the other gamble had outcome values both above and below the reference point. A model of the effects of a reference point on risky choice behavior is presented and the results are also discussed in terms of the Fishburn and Kahneman-Tversky models, as well as other theories of risky decision making.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 26 (1980)
    Issue (Month): 10 (October)
    Pages: 1039-1060

    as in new window
    Handle: RePEc:inm:ormnsc:v:26:y:1980:i:10:p:1039-1060

    Contact details of provider:
    Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Web page:
    More information through EDIRC

    Related research

    Keywords: decision making; aspiration level; utility preference;


    No references listed on IDEAS
    You can help add them by filling out this form.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.


    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:26:y:1980:i:10:p:1039-1060. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.