Does consultation improve decision making?

This paper reports an experiment designed to test whether prior consultation within a group affects subsequent individual decision making in tasks where demonstrability of correct solutions is low. In our experiment subjects considered two paintings created by two different artists and were asked to guess which artist made each painting. We observed answers given by individuals under two treatments: in one, subjects were allowed the opportunity to consult with other participants before making their private decisions; in the other there was no such opportunity. Our primary findings are that subjects in the first treatment evaluate the opportunity to consult positively but they perform significantly worse and earn significantly less.Consultation; Decision making; Group decisions; Individual decisions

Fandango

https://digitalcommons.library.umaine.edu/mmb-vp/4193/thumbnail.jp

I Want A Little Lovin\u27, Sometimes

https://digitalcommons.library.umaine.edu/mmb-vp/1703/thumbnail.jp

Fifty - Fifty

https://digitalcommons.library.umaine.edu/mmb-vp/5440/thumbnail.jp

Explaining preference reversal with third-generation prospect theory

We present a new theory of decision under risk called third-generation prospect theory. A novel feature of our version of prospect theory is that, by allowing reference points to be uncertain, it is able to accommodate the phenomenon of preference reversal. While several previous theories of preference reversal have been proposed, thus far it has resisted explanation via any empirically plausible model of preferences. We investigate whether our explanation is empirically plausible. We find that the standard patterns of preference reversal are predicted for typical parameterisations of prospect theory already established in the empirical literature. Consequently we suggest that our model constitutes a best buy theory: it offers the predictive power of previous variants of prospect theory and adds to that an explanation of preference reversal. The latter comes ‘free of charge’ since it involves no extra parameters and no re-parameterisation

Does consultation improve decision-making?

This paper reports an experiment designed to test whether prior consultation within a group affects subsequent individual decision-making in tasks where demonstrability of correct solutions is low. In our experiment, subjects considered two paintings created by two different artists and were asked to guess which artist made each painting. We observed answers given by individuals under two treatments: In one, subjects were allowed the opportunity to consult with other participants before making their private decisions; in the other, there was no such opportunity. Our primary findings are that subjects in the first treatment evaluate the opportunity to consult positively, but they perform significantly worse and earn significantly less

How do risk attitudes affect measured confidence?

We examine confidence in own absolute performance using two elicitation procedures: selfreported (non-incentivised) confidence and an incentivised procedure that elicits the certainty equivalent of a bet based on performance. The former procedure reproduces the "hard-easy effect" (overconfidence in easy tasks and underconfidence in hard tasks) found in a large number of studies using non-incentivised self-reports. The latter procedure produces general underconfidence, which is somewhat reduced when we filter out the effects of risk attitudes. However, even after controlling for risk attitudes our incentivised procedure leads to significant underconfidence, and does not lead to better calibration between confidence and performance than non-incentivised self-reports. Finally, we find that self-reported confidence correlates significantly with features of individual risk attitudes including parameters of individual probability weighting

How do risk attitudes affect measured confidence?

We examine the relationship between confidence in own absolute performance and risk attitudes using two elicitation procedures: self-reported (non-incentivised) confidence and an incentivised procedure that elicits the certainty equivalent of a bet based on performance. The former procedure reproduces the "hard-easy effect" (overconfidence in easy tasks and underconfidence in hard tasks) found in a large number of studies using non-incentivised self-reports. The latter procedure produces general underconfidence, which is significantly reduced, but not eliminated when we filter out the effects of risk attitudes. Finally, we find that self-reported confidence correlates significantly with features of individual risk attitudes including parameters of individual probability weighting

Consumption experience, choice experience and the endowment effect

This paper reports an experiment investigating how different kinds of experience influence the endowment effect. Previous studies have investigated how the endowment effect is influenced by experience gained through repetition of decision problems and trading in natural and experimental markets. In this study we explore how it is influenced by experience of consuming elements of a potential endowment and by experience of choosing prior to acquiring an endowment. We find evidence of an endowment effect and that measured loss aversion predicts the reluctance to trade. We find no effect of consumption experience. Choice experience increases trading. Finally, we find evidence of a new species of 'splitting effect', whereby acquiring an endowment in two instalments significantly reduces trading