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Decision difficulty and imprecise preferences
Journal article   Peer reviewed

Decision difficulty and imprecise preferences

D.J. Butler and G.C. Loomes
Acta Psychologica, Vol.68(1-3), pp.183-196
1988
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Abstract

Conventional utility analysis assumes that individuals can give ‘certainty equivalent’ valuations of risky prospects. Our experimental evidence suggests that many people do not find this task easy. This paper considers evidence from more than 100 participants in a ‘payment-by-results’ experiment. The subjects were asked to place certainty equivalent valuations on some simple gambles, after having made a short series of choices in the vicinity of those valuations. At each decision point they were asked to record how confident they felt about these decisions. We discuss the light this sheds on the ‘sphere of haziness’ in which individuals often need to operate.

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Citation topics
6 Social Sciences
6.122 Economic Theory
6.122.1287 Risk Preferences
Web Of Science research areas
Psychology, Experimental
ESI research areas
Psychiatry/Psychology
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