Reference-dependent expected utility with incomplete preferences

An important reason why people deviate from expected utility is reference-dependence of preferences, implying loss aversion. Bleichrodt [Bleichrodt H. (2007). Reference-dependent utility with shifting reference points and incomplete preferences. Journal of Mathematical Psychology, 51, 266-276] argued that in the empirically realistic case where the reference point is always an element of the decision maker’s opportunity set, reference-dependent preferences have to be taken as incomplete. This incompleteness is a consequence of reference-dependence and is different in nature from the type of incompleteness usually considered in the literature. It cannot be handled by existing characterizations of reference-dependence, which all assume complete preferences. This paper presents new preference foundations that extend reference-dependent expected utility to cover this case of incompleteness caused by reference-dependence. The paper uses intuitive axioms that are easy to test. Two special cases of reference-dependent expected utility are also characterized: one model in which utility is decomposed into a normative and a psychological component and one model in which loss aversion is constant. The latter model has been frequently used in empirical research on reference-dependence.     

Testing the reference-dependent model: an experiment on asymmetrically dominated reference points

Standard choice theory assumes choice to be independent of the point of reference. Based on a number of studies which challenge this assumption, Tversky and Kahneman have proposed a reference-dependent model which captures the influence of reference points on individual choice. If choice is reference-dependent, switching the reference point so that it is first dominated by x and then by y increases the likelihood of choosing y. Switching the location of an asymmetrically dominated reference point without altering the dominance relationship should also influence reference-dependent choice in a predicted manner. In this paper the reference-dependent model is tested in two experiments which focus on asymmetrically dominated reference points. The results of these experiments give further confirmation to the reference-dependent model. © 1998 John Wiley & Sons, Ltd.     

The origins and function of the reference point in risky group decision making the case of the Cuban missile crisis

This case study explores reference level effects on group decision making during the Cuban missile crisis of 1962. The group is composed of American President John F. Kennedy and his advisers. The results are consistent with much experimental evidence showing that reference levels play an important role in determining preferences. The results also extend the notion of reference-dependent risky choice to the group level, where the group consists of seasoned experts who each have a different role to play within the group and who are dealing with an issue of great importance.     

The Feasibility OF Collectives' Actions

Orthodox decision theory gives no advice to agents who hold two goods to be incommensurate in value because such agents will have incomplete preferences. According to standard treatments, rationality requires complete preferences, so such agents are irrational. Experience shows, however, that incomplete preferences are ubiquitous in ordinary life. In this paper, we aim to do two things: (1) show that there is a good case for revising decision theory so as to allow it to apply non-vacuously to agents with incomplete preferences, and (2) to identify one substantive criterion that any such non-standard decision theory must obey. Our criterion, Competitiveness, is a weaker version of a dominance principle. Despite its modesty, Competitiveness is incompatible with prospectism, a recently developed decision theory for agents with incomplete preferences. We spend the final part of the paper showing why Competitiveness should be retained, and prospectism rejected.     

风险决策中的双参照点效应

以预期理论为代表的决策理论认为, 决策者自身的损益状态对风险决策有重要作用, 因此, 将决策者的现状定义为个人参照点。它决定了决策情境是个人获益还是个人损失。个人参照点直接关乎决策者实际的得失, 具有直接性、真实性和绝对性的特征。然而, 社会比较理论认为, 与他人的比较结果同样对风险决策具有不可忽视的意义。因此, 将他人的状态定义为社会参照点。自身的现状与他人状态相比较的结果决定了决策情境是社会获益还是社会损失。社会参照点无关决策者的实际得失, 具有间接性、假设性和相对性的特征。社会参照点通过自我概念、情绪、认知等路径作用于风险决策。更为重要的是, 社会参照点和个人参照点同时存在于风险决策过程中, 决策者对两者的心理感受和行为倾向具有相似性, 因此两者将共同影响决策者的风险选择。基于此, 本文提出风险决策中的双参照点效应。有关双参照点对风险决策过程的影响机制还需进一步的探讨。     

决策过程中参照点效应研究述评

Kahneman和Tversky提出的“参照点效应”概念,对决策者的认知编码和信息整合方式做出了合理的解释,并对传统的理性决策理论提出了挑战。近年来,关于参照点效应的研究也一直受到众多学者的重视。文章系统阐述了参照点效应的相关概念和最新研究进展,并提出了参照点效应未来研究的4个趋势：日益重视多重参照点效应的研究、开始关注动态决策中的参照点变化机制、重视群体决策过程中的参照点效应研究、注重在现实决策任务中验证和发展参照点效应的相关理论     

基于预期理论的参照依赖

参照依赖是指个体基于某一参照点对得失价值进行判断:参照点之上,个体感受为收益,反之即为损失.参照依赖现象广泛存在于生活中的各种领域.当前,对参照依赖心理机制的解释主要有预期理论、后悔理论和三阶段参照点理论.参照依赖的影响因素主要包括经验、情绪状态、文化、目标和认知对象的特点等.未来的研究应主要集中于参照依赖的产生根源,深入探讨参照依赖的神经机制,加强动态参照点、多重参照点以及群体中参照依赖现象的研究.     

Group decision as a twice multicriteria optimum problem

This paper studies the problem of aggregation of preferences, preserving the multicriteria nature of the individual decision process. The resulting group decision problem is in effect a twice multicriteria optimum problem. We give a structural theory for the efficient set of this optimum problem. Moreover, on the basis of this theory we study the relationships between optimality, consensus and evaluation. We confirm the pathological nature of aggregation of preferences, but in a new setting and with a different meaning.     

决策的三参照点理论:从原理到应用

三参照点理论(Tri-Reference Point Theory,Wang,2008a; Wang& Johnson,2012)以底线、现状和目标为参照点,将决策结果空间划分为失败、损失、获益和成功4个功能区域.根据3个参照点的心理权重的排序:底线＞目标＞现状,该模型继而推导出跨越不同区域的以现状为分界的双S-型的价值函数,以及据此产生的对于跨越不同参照点的预期结果的偏好转换、和损失-获益及失败-成功的两种不对称性.总之,风险决策的基本任务在于,在使得达到目标的可能性最大化的同时使底线不保的可能性最小化.三参照点理论将统计学和金融学中的均值与方差(均差)分析与行为决策研究中的参照点效应有机地结合在一起;在面对不同的风险选项时,通过分析各个预期结果的均差分布与3个参照点之间的关系作出适应性的决策.本文介绍了三参照点理论的基本推论、运行原则、实证检验、以及它与期望效用理论和前景理论相比较的异同之处.同时我们也探讨了三参照点理论对实践中管理决策的指导意义和多重启示.     

守范?失范?——作为参照点的社会规范对决策行为的影响

作为参照点的社会规范指个体为实现群体目标保持活动一致性所建立起来的、视为决策与判断标准的规范。社会规范研究经历了从完全理性到有限理性的转变过程。其对决策行为影响的解释机制包括预期理论、后悔理论、"齐当别"抉择模型、程数说和三参照点理论等,能较好解释避税、见死不救与医患冲突等现象。今后研究注意结合社会认知角度,实现研究思想与范式的转变,侧重探索多重参照点、群体决策机制,丰富跨文化研究等,为转型期的守范与失范行为提供科学的解释。     

The Price Is Right—Or Is It? A Reference Point Model of Two-Party Price Negotiations

This paper develops a social cognitive, reference point model of two-party price negotiations. The theoretical focus is on the role that reference points play as a means of calibration in the individual negotiator's decision processes and as a means of social influence in bargaining. Three studies are presented which examine how reference points based on personal preferences and budget constraints (i.e., reservation values) are combined with reference points based on available market information to affect outcomes. These studies support the interpretation that in captive transactions, contextual cues determine the extent to which market information versus reservation values influence outcomes. Certain contextual cues trigger perceptions of low versus high price variance, which in turn, lead negotiators to weight market information more or less heavily in internal processing and bargaining. When perceptions of low price variance are present, market information influences outcomes more than private reservation values. When perceptions of high price variance are present, reservation values tend to be more dominant in determining outcomes.     

基于预期理论的风险决策的神经机制

预期理论基于对期望效用理论的批判与发展,提出了价值函数与权重函数,对以往风险决策研究中所发现的现象进行了很好的预测与解释。预期理论的核心概念包括参照依赖、损失规避与权重函数。基于预期理论的一些决策偏差包括框架效应、禀赋效应和默认偏差也部分揭示了与人们风险决策有关的脑区。近年来,通过采用功能性核磁共振等脑成像手段对预期理论的一些核心成分进行的研究表明,涉及到人们风险决策的脑区主要有前额叶、纹状体、脑岛与杏仁核。未来的研究可以从预期理论的产生根源、个体发展以及遗传基因等角度进行进一步的探讨。     

The locality and globality of instrumental rationality: the normative significance of preference reversals

When we ask a decision maker to express her preferences, it is typically assumed that we are eliciting a pre-existing set of preferences. However, empirical research has suggested that our preferences are often constructed on the fly for the decision problem at hand. This paper explores the ramifications of this empirical research for our understanding of instrumental rationality. First, I argue that these results pose serious challenges for the traditional decision-theoretic view of instrumental rationality, which demands global coherence amongst all of one’s beliefs and desires. To address these challenges, I first develop a minimal notion of instrumental rationality that issues in localized, goal-relative demands of coherence. This minimal conception of instrumental rationality is then used to offer a more sophisticated account of the global aspects of instrumental rationality. The resulting view abandons all-or-nothing assessments of rationality and allows us to evaluate decision makers as being rational to varying degrees. My aim is to propose a theory that is both psychologically and normatively plausible.     

Reference-dependent sympathy

Natural disasters and other traumatic events often draw a greater charitable response than do ongoing misfortunes, even those that may cause even more widespread misery, such as famine or malaria. Why is the response disproportionate to need? The notion of reference dependence critical to Prospect Theory (Kahneman & Tversky, 1979) maintains that self-utility, or benefit to self, is not absolute level of wealth but rather gain or loss relative to a reference point. Four studies show that sympathy (Study 1), dictator offers (Study 2), and judgments of deservingness (Study 3a) are reference-dependent: people respond greater to victims of loss than to victims of chronic conditions. This tendency goes away when people evaluate victims in comparison (Study 3b) and when evaluating affect-poor “statistical victims”, as compared to affect-rich “identifiable victims” (Study 4). Together, these results shed light on seemingly irrational patterns of humanitarian aid.     

风险敏感理论:需要驱动风险决策

风险敏感理论由研究动物觅食行为发展而来,提出有机体在有需要的状况下会出现从风险规避到风险寻求的行为,是风险决策领域内的一种生物学理论。目前风险敏感理论所做出的预测在动物和人类身上都获得了大量实证研究的支持,表明该理论可以解释很多领域中的风险决策。因此有必要对这一理论做一个系统的论述,包括对其理论来源和数学模型的发展演变进行梳理;从参照点等不同的角度分析该理论与其他决策理论的区别;并且,风险敏感理论也为经济不平等和权力等外部因素下的风险转移提供了解释,对已有研究做出了独特的贡献。     

An Approach for Determining the Mix between Human and Automated Service Providers

With the growing popularity of self‐service technologies (SST), businesses have to determine how to combine traditional human service with SST technologies. These mix problems have not received adequate attention in the research literature. This paper offers a decision model for solving mix problems between human service channels and SSTs. The decision problem cannot be determined as a traditional max or min problem and it is fuzzy. In fuzzy problems, the decision maker (DM) is considered as the focal point with the relevant knowledge and preferences and therefore, the objective is to maximize the DM's preferences. This paper develops a decision support system for eliciting a DM's value function when the service channels are considered to be substitutes, but when the rate of substitution may change and then uses a linear‐fractional model to fit the DM's data and optimize the DM's preferences. A service mix problem for a grocery store with human service providers and SSTs is used to demonstrate how the decision model can be employed to analyze and solve service mix decision making problems. Copyright © 2014 John Wiley & Sons, Ltd.     

Time is on my side: optimism in intertemporal choice

The present research examines the role of optimism on time preferences for both losses and gains. It is argued that optimism has asymmetric effects on time preferences for gains versus losses: one reason why decision makers prefer immediate gains is because they are optimistic that these gains will be followed by additional gains in future. In contrast, decision makers prefer to delay losses because they are optimistic that losses are avoidable in the future. Optimism about outcomes affects time preferences for both gains and losses, such that low optimism reduces the discount rates while increased optimism is associated with higher discount rates. This prediction was supported in two different domains: monetary outcomes (Study 1), and health (Study 2). Implications of these results for both research practice and time preferences in the real world are discussed.     

Do Politicians Take Risks Like the Rest of Us? An Experimental Test of Prospect Theory Under MPs

Political psychologists have been quick to use prospect theory in their work, realizing its potential for explaining decisions under risk. Applying prospect theory to political decision‐making is not without problems, though, and here we address two of these: (1) Does prospect theory actually apply to political decision‐makers, or are politicians unlike the rest of us? (2) Which dimension do politicians use as their reference point when there are multiple dimensions (e.g., votes and policy)? We address both problems in an experiment with a unique sample of Dutch members of parliament as participants. We use well‐known (incentivized) decision situations and newly developed hypothetical political decision‐making scenarios. Our results indicate that politicians’ deviate from expected utility theory in the direction predicted by prospect theory but that these deviations are somewhat smaller than those of other people. Votes appear to be a more important determinant of politicians’ reference point than is policy.     

From Outcomes to Acts: A Non-Standard Axiomatization of the Expected Utility Principle

This paper presents an axiomatization of the principle of maximizing expected utility that does not rely on the independence axiom or sure-thing principle. Perhaps more importantly the new axiomatization is based on an ex ante approach, instead of the standard ex post approach. An ex post approach utilizes the decision maker's preferences among risky acts for generating a utility and a probability function, whereas in the ex ante approach a set of preferences among potential outcomes are on the input side of the theory and the decision maker's preferences among risky acts on the output side.     

Effects of product portfolios and recommendation timing in the efficiency of personalized recommendation

Personalized recommendation has important implications in raising online shopping efficiency and increasing product sales. There has been wide interest in finding ways to provide more efficient personalized recommendations. Most existing studies focus on how to improve the accuracy and efficiency of the recommendation algorithms or are more concerned on ways to reduce perceived risks and thus increase consumer satisfaction. Unlike these studies, our study begins from the decision‐making process of consumers, using consumers' two‐stage decision‐making system and preference inconsistency theory as a basis, to reveal the mechanisms involved in consumers' acceptance of recommendations. This paper analyzes the effect of personalized recommendations from two angles, recommendation timing and product portfolio, tries to point out differences in consumer preferences between similar products and related products, and verifies that consumers demand diversity in the recommended content. The study analyzes differences in the acceptance of personalized recommendations between practical products and hedonic products and discovers that recommendations of hedonic products are more effective than that of practical products. Based on the research earlier, the study provides suggestions on how to better plan and operate a personalized recommendation system. Copyright © 2016 John Wiley & Sons, Ltd.