Explaining heterogeneity in utility functions by individual differences in decision modes

Daniel Schunk

No 5078, MEA discussion paper series from Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy

Abstract: The curvature of utility functions varies between people. We suggest that there is a relationship between individual differences in preferred decision mode (intuition vs. deliberation) and the curvature of the individual utility function. If a person habitually prefers a deliberative mode, the utility function should be nearly linear, while it should be curved when a person prefers the intuitive mode. In this study the utility functions of the subjects were assessed using a lottery-based elicitation method and related to a measurement of the habitual mode preference for intuition and deliberation. Results confirm that people who prefer the deliberative mode have a utility function that is more linear than for people who prefer the intuitive mode. Our findings indicate a stronger affective bias of subjective values in intuitive than deliberate decision makers. While deliberative decision makers may have rather used the stated values, intuitive decision makers may have additionally integrated affective reactions towards the stimuli into the decision.

Date: 2005-06-21
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Journal Article: Explaining heterogeneity in utility functions by individual differences in decision modes (2006)
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