Multiattribute Risky Choice Behavior: The Editing of Complex Prospects

John W. Payne, Dan J. Laughhunn and Roy Crum
Additional contact information
John W. Payne: Fuqua School of Business, Duke University, Durham, North Carolina 27706
Dan J. Laughhunn: Center for International Economic and Business Studies, University of Florida, Gainesville, Florida 32605
Roy Crum: Center for International Economic and Business Studies, University of Florida, Gainesville, Florida 32605

Management Science, 1984, vol. 30, issue 11, 1350-1361

Abstract: This investigation draws upon concepts from prospect theory (Kahneman and Tversky [Kahneman, D., A. Tversky. 1979. Prospect theory: an analysis of decisions under risk. Econometrica 47 263--291.]) and multiattribute utility theory (Keeney and Raiffa [Keeney, R. L., H. Raiffa. 1976. Decisions with Multiple Objectives: Preferences and Value Tradeoffs. Wiley, New York.]) in an examination of the multiattribute risky choice behavior of 128 managers. The questions of how managers edit multiattribute prospects and how editing relates to various independence assumptions were explored. The major result is that managers appear to violate attribute independence in its general form, and especially in the form of the marginality assumption. The most common form of behavior observed was multiattribute risk aversion for prospects involving only gains and multiattribute risk seeking for prospects involving only losses. This result reinforces the importance of a target, reference point, or aspiration level that has been found in earlier studies of single attribute risky choice. Furthermore, the result casts doubt on such commonly used multiattribute utility functions as the additive, multiplicative, and multilinear forms. The implications of the results for the development of multiattribute risky decision aids are discussed.

Keywords: decision making; risk; multiattribute utility theory (search for similar items in EconPapers)
Date: 1984
References: Add references at CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.30.11.1350 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:30:y:1984:i:11:p:1350-1361

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().