Tests of cumulative prospect theory with graphical displays of probability

Judgment and Decision Making

Volumn 3, Issue 7, 2008, Pages 528-546

  Birnbaum, Michael H ^b   Johnson, Kathleen ^a   Longbottom, Jay Lee ^a  

^a CALIFORNIA STATE UNIVERSITY   (United States)

^b Department of Psychology ^*  (United States)

Author keywords

Branch independence; Cancellation; Choice; Combination; Cumulative prospect theory; Graphical format; Priority heuristic; Tax model; Uncertainty

Indexed keywords

EID: 70350147176     PISSN: None     EISSN: 19302975     Source Type: Journal    
DOI: None     Document Type: Article

References (51)

1. Allais, M., & Hagen, O. (Ed.). (1979). Expected utility hypothesis and the Allais paradox. Dordrecht, The Netherlands: Reidel.
2. Birnbaum, M. H. (1997). Violations of monotonicity in judgment and decision making. In A. A. J. Marley (Eds.), Choice, decision, and measurement: Essays in honor of R. Duncan Luce (pp. 73-100). Mahwah, NJ: Erlbaum.
3. Birnbaum, M. H. (1999a). Paradoxes of Allais, stochastic dominance, and decision weights. In J. Shanteau, B. A. Mellers, & D. A. Schum (Eds.), Decision science and technology: Reflections on the contributions of Ward Edwards (pp. 27-52). Norwell, MA: Kluwer Academic Publishers.
4. Birnbaum, M. H. (1999b). Testing critical properties of decision making on the Internet. Psychological Science, 10, 399-407.
5. Birnbaum, M. H. (2001). A Web-based program of research on decision making. In U.-D. Reips & M. Bosnjak (Eds.), Dimensions of Internet science (pp. 23-55). Lengerich, Germany: Pabst Science Publishers.
6. Birnbaum, M. H. (2004a). Causes of Allais common consequence paradoxes: An experimental dissection. Journal of Mathematical Psychology, 48, 87-106.
7. Birnbaum, M. H. (2004b). Tests of rank-dependent utility and cumulative prospect theory in gambles represented by natural frequencies: Effects of format, event framing, and branch splitting. Organizational Behavior and Human Decision Processes, 95, 40-65.
8. Birnbaum, M. H. (2005). Three new tests of independence that differentiate models of risky decision making. Management Science, 51, 1346-1358.
9. Birnbaum, M. H. (2006). Evidence against prospect theories in gambles with positive, negative, and mixed consequences. Journal of Economic Psychology, 27, 737- 761.
10. Birnbaum, M. H. (2007). Tests of branch splitting and branch-splitting independence in Allais paradoxes with positive and mixed consequences. Organizational Behavior and Human Decision Processes, 102, 154-173.
11. Birnbaum, M. H. (2008a). Evaluation of the priority heuristic as a descriptive model of risky decision making: Comment on Brandstä tter, Gigerenzer, and Hertwig (2006). Psychological Review, 115, 253-262.
12. Birnbaum, M. H. (2008b). New paradoxes of risky decision making. Psychological Review, 115, 463-501.
13. Birnbaum, M. H. (2008c). New tests of cumulative prospect theory and the priority heuristic: Probabilityoutcome tradeoff with branch splitting. Judgment and Decision Making, 3, 304-316.
14. Birnbaum, M. H., & Chavez, A. (1997). Tests of theories of decision making: Violations of branch independence and distribution independence. Organizational Behavior and Human Decision Processes, 71, 161- 194.
15. Birnbaum, M. H., & Navarrete, J. B. (1998). Testing descriptive utility theories: Violations of stochastic dominance and cumulative independence. Journal of Risk and Uncertainty, 17, 49-78.
16. Birnbaum, M. H., & Stegner, S. E. (1979). Source credibility in social judgment: Bias, expertise, and the judge's point of view. Journal of Personality and Social Psychology, 37, 48-74.
17. Birnbaum, M. H., & Sutton, S. E. (1992). Scale convergence and utility measurement. Organizational Behavior and Human Decision Processes, 52, 183-215.
18. Birnbaum, M. H., & Zimmermann, J. M. (1998). Buying and selling prices of investments: Configural weight model of interactions predicts violations of joint independence. Organizational Behavior and Human Decision Processes, 74, 145-187.
19. Bleaney, M., & Humphrey, S. J. (2006). An experimental test of generalized ambiguity aversion using lottery pricing tasks. Theory and Decision, 60, 257-282.
20. Brandstä tter, E., Gigerenzer, G., & Hertwig, R. (2006). The priority heuristic: Choices without tradeoffs. Psychological Review, 113, 409-432.
21. Brandstä tter, E., Gigerenzer, G., & Hertwig, R. (2008). Risky Choice with Heuristics: Reply to Birnbaum (2008), Johnson, Schulte-Mecklenbeck, & Willemsen (2008) and Rieger & Wang (2008). Psychological Review, 115, 281-289.
22. Camerer, C. F. (1998). Bounded rationality in individual decision making. Experimental Economics, 1, 163- 183.
23. Cutie, C. L., Weinstein, N. D., Emmons, K., & Colditz, G. (2008). A test of numeric formats for communicating risk probabilities. Medical Decision Making, 28, 377-384.
24. Edwards, W. (1962). Subjective probabilities inferred from decisions. Psychological Review, 69, 109-135.
25. Evanschitzky, H., Baumgarth, C., Hubbard, R., & Armstrong, J. S. (2007). Replication research's disturbing trend. Journal of Business Research, 60, 411-415.
26. Fox, C. R., & Hadar, L. (2006). " Decisions from experience" = sampling error + prospect theory: ReconsideringHertwig, Barron, Weber & Erev (2004). Judgment and Decision Making, 1, 159-161.
27. Goldstein, W., & Einhorn, H. J. (1987). A theory of preference reversals. Psychological Review, 94, 236-242.
28. Harless, D. W. (1992). Actions versus prospects: The effect of problem representation on regret. The American Economic Review, 82, 634-649.
29. Hertwig, R., Barron, G., Weber, E. U., & Erev, I. (2004). Decisions from experience and the effect of rare events in risky choices. Psychological Science, 15, 534-539.
30. Huff, D. (1954). How to lie with statistics. New York: Norton.
31. Humphrey, S. J. (1995). Regret aversion or eventsplitting effects? More evidence under risk and uncertainty. Journal of risk and uncertainty, 11, 263-274.
32. Kahneman, D. (2003). Experiences of collaborative research. American Psychologist, 58, 723-730.
33. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47, 263-291.
34. Keller, L. R. (1985). The effects of problem representation on the sure-thing and substitution principles. Management Science, 31, 738-751.
35. Levin, I. P., Schneider, S. L., & Gaeth, G. J. (1998). All frames are not created equal: A typology of framing effects. Organizational Behavior and Human Decision Processes, 76, 149-188.
36. Lichtenstein, S., & Slovic, P. (1971). Reversals of preference between bids and choices in gambling decisions. Journal of Experimental Psychology, 89, 46-55.
37. Lindman, H. R. (1971). Inconsistent preferences among gambles. Journal of Experimental Psychology, 89, 390-397.
38. Lipkus, I. M. (2007). Numeric, verbal, and visual formats of conveying health risks: Suggested best practices and future recommendations. Medical Decision Making, 27, 696-713.
39. Luce, R. D., & Fishburn, P. C. (1991). Rank- and signdependent linear utility models for finite first order gambles. Journal of Risk and Uncertainty, 4, 29-59.
40. Luce, R. D., & Fishburn, P. C. (1995). A note on deriving rank-dependent utility using additive joint receipts. Journal of Risk and Uncertainty, 11, 5-16.
41. Mellers, B. A., Ordó ñ ez, L., & Birnbaum, M. H. (1992). A change-of-process theory for contextual effects and preference reversals in risky decision making. Organizational Behavior and Human Decision Processes, 52, 331-369.
42. Slovic, P., & Lichtenstein, S. (1983). Preference reversals: A broader perspective. American Economic Review, 73, 596-605.
43. Starmer, C. (2000). Developments in non-expected utility theory: The hunt for a descriptive theory of choice under risk. Journal of Economic Literature, 38, 332- 382.
44. Starmer, C., & Sugden, R. (1993). Testing for juxtaposition and event-splitting effects. Journal of Risk and Uncertainty, 6, 235-254.
45. Tversky, A., & Fox, C. R. (1995). Weighing Risk and Uncertainty. Psychological Review, 102, 269-283.
46. Tversky, A., & Kahneman, D. (1986). Rational choice and the framing of decisions. Journal of Business, 59, S251-S278.
47. Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty.Journal of Risk and Uncertainty, 5, 297-323.
48. Tversky, A., Sattath, S., & Slovic, P. (1988). Contingent weighting in judgment and choice. Psychological Review, 95, 371-384.
49. Tversky, A., Slovic, P., & Kahneman, D. (1990). The causes of preference reversal. American Economic Review, 80, 204-217.
50. Weber, B. J. (2007). The effect of losses and event splitting on the Allais paradoxes. Judgment and Decision Making, 2, 115-125.
51. Wu, G., Zhang, J., & Gonzalez, R. (2004). Decision under risk. In D. Koehler & N. Harvey (Eds.), Blackwell Handbook of Judgment and Decision Making (pp. 399-423). Oxford: Oxford University Press.