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The Reliability of Subjective Probabilities Obtained Through Decomposition

Author

Listed:
  • H. V. Ravinder

    (Anderson School of Management, University of New Mexico, Albuquerque, New Mexico 87131)

  • Don N. Kleinmuntz

    (Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • James S. Dyer

    (Department of Management, University of Texas at Austin, Austin, Texas 78712)

Abstract

The use of decomposition as a procedure for improving the consistency of subjective probability encoding is discussed. Using a psychometric measurement model, an expression is developed that describes the random error associated with decomposition estimates as a function of characteristics of the component assessments. Decomposition is compared to direct assessment in terms of the percent change in measurement error that can be attributed to the use of decomposition. Potential benefits of decomposition are specified and recommendations made on how to utilize decomposition as an approach for error control.

Suggested Citation

  • H. V. Ravinder & Don N. Kleinmuntz & James S. Dyer, 1988. "The Reliability of Subjective Probabilities Obtained Through Decomposition," Management Science, INFORMS, vol. 34(2), pages 186-199, February.
    • Handle: RePEc:inm:ormnsc:v:34:y:1988:i:2:p:186-199
    DOI: 10.1287/mnsc.34.2.186
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    17. Ali Mosleh & Vicki Bier, 1992. "On Decomposition and Aggregation Error in Estimation: Some Basic Principles and Examples," Risk Analysis, John Wiley & Sons, vol. 12(2), pages 203-214, June.
    18. Robert T. Clemen & Canan Ulu, 2008. "Interior Additivity and Subjective Probability Assessment of Continuous Variables," Management Science, INFORMS, vol. 54(4), pages 835-851, April.
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