Utility measurement: signal, noise, and bias
Article Abstract:
The potential prescriptive value of the von Neumann-Morgenstern (NM) utility construct was analyzed using certainty-equivalence (CE) versus probability-equivalence (PE) judgements. Models for random noise effects, anchoring and insufficient adjustment, and PE reframing were developed and tested to facilitate the analysis. Results show that multiple biases invoked by highly stylized, simple questions seriously complicate preference elicitaion and utility encoding. This implies that uncontrolled utility encoding is harmful in decision analysis.
Publication Name: Organizational Behavior & Human Decision Processes
Subject: Psychology and mental health
ISSN: 0749-5978
Year: 1992
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Maximizing your chance of winning: the long and short of it revisited
Article Abstract:
Maximizing one's chances of winning is a sound heuristic when encountering risks that are repeated at least twice and that reflect minimal skewed distribution. This was gleaned from an examination of the Maximize the Probability of Winning heuristic, which was tested with pairs of mixed gambles taken randomly from a population of gambles with an overall expected value (EV) of zero. It was found that the simple rule of choosing the gamble with the highest probability of winning is a good approximation of the EV rule.
Publication Name: Organizational Behavior & Human Decision Processes
Subject: Psychology and mental health
ISSN: 0749-5978
Year: 1996
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Judgement by outcomes: when is it justified?
Article Abstract:
The quality of decision making is influenceed by the amount of outcome information present with the decision maker. In assessing the quality of decisions, it is best to examine the circumstances involved when such decisions were made. Decision quality assessments should not be made on the basis of the actual outcome of the decision, but rather by how the course of action was decided upon before any results were recorded.
Publication Name: Organizational Behavior & Human Decision Processes
Subject: Psychology and mental health
ISSN: 0749-5978
Year: 1992
User Contributions:
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