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Receiving Two Consequences: Tests of Monotonicity and Scale Invariance
Organizational Behavior and Human Decision Processes
|September 7, 2000
Summary
This study on decision making found that choices generally follow monotonicity but violate scale invariance. These findings challenge fundamental assumptions in utility theory.
Area of Science:
- Decision Science
- Behavioral Economics
- Cognitive Psychology
Background:
- Decision making involves evaluating alternatives with multiple consequences.
- Understanding behavioral properties of choice is crucial for economic and psychological theories.
Purpose of the Study:
- To investigate the behavioral properties of monotonicity and scale invariance in joint receipt decision making.
- To test the validity of these properties within utility theory.
Main Methods:
- Participants evaluated lotteries with joint receipt outcomes.
- Monotonicity and scale invariance properties were statistically tested against observed choices.
Main Results:
- Monotonicity of joint receipt was not rejected by the data.
- Scale invariance was rejected for several classes of lotteries, including binary and general joint receipt lotteries.
Conclusions:
- Scale invariance does not hold universally in decision making under joint receipt.
- Findings necessitate a re-evaluation of fundamental assumptions in utility theory and its functional forms.