Explaining heterogeneity in utility functions by individual differences in preferred decision modes

Schunk, Daniel ; Betsch, Cornelia

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URL: http://ub-madoc.bib.uni-mannheim.de/2718
URN: urn:nbn:de:bsz:180-madoc-27180
Document Type: Working paper
Year of publication: 2004
The title of a journal, publication series: None
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject: 300 Social sciences, sociology, anthropology
Classification: JEL: D81 C91 ,
Subject headings (SWD): Nutzenfunktion , Entscheidung , Test
Keywords (English): Utility function elicitation , risky decisions , intuition , value function , individual differences
Abstract: The curvature of utility functions varies between people. We suggest that there exists a relationship between the mode in which a person usually makes a decision and the curvature of the individual utility function. In a deliberate decision mode, a decision-maker tends to have a nearly linear utility function. In an intuitive decision mode, the utility function is more curved. In our experiment the utility function is assessed with a lottery-based utility elicitation method and related to a measure that assesses the habitual preference for intuition and deliberation (Betsch, submitted). Results confirm that for people that habitually use the deliberate decision mode, the utility function is more linear than for people that habitually use the intuitive decision mode. The finding and its implications for the research on individual decision behavior in economics and psychology are discussed.
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