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

Bias in Utility Assessments: Further Evidence and Explanations

Contents:

Author Info

  • Eric J. Johnson

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • David A. Schkade

    (College of Business Administration, University of Texas, Austin, Texas 78712)

Registered author(s):

    Abstract

    Judgments about simple gambles, such as those used in utility assessment, can generate sizable and systematic bias. After Hershey and Schoemaker (Hershey, J. C., P. J. H. Schoemaker. 1985. Probability vs. certainty equivalence methods in utility measurement: Are they equivalent? Management Sci. 31 1213--1231.), we employ both the probability and certainty equivalence methods to explore bias. Our results show that: (1) the direction and degree of bias depend on characteristics of the assessment gamble such as the reference probability and the difference between outcomes, (2) presenting subjects with explicit anchors can change the size and direction of the bias, and (3) subjects using heuristic response strategies show significantly more bias than those using expectation strategies. We also discuss the status of possible explanations for the bias, in light of these new results, including PE mode reframing, random error, and anchoring and adjustment.

    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: http://dx.doi.org/10.1287/mnsc.35.4.406
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 35 (1989)
    Issue (Month): 4 (April)
    Pages: 406-424

    as in new window
    Handle: RePEc:inm:ormnsc:v:35:y:1989:i:4:p:406-424

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

    Related research

    Keywords: decision analysis; utility assessment; decision-making; heuristics;

    References

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

    Citations

    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.

    Lists

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

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:35:y:1989:i:4:p:406-424. 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.