Much research has highlighted incoherent implications of judgmental heuristics, yet other findings have demonstrated high correspondence between predictions and outcomes. At the same time, judgment has been well modeled in the form of as if linear models. Accepting the probabilistic nature of the environment, the authors use statistical tools to model how… (More)
The mathematical representation of E. Brunswik's (1952) lens model has been used extensively to study human judgment and provides a unique opportunity to conduct a meta-analysis of studies that covers roughly 5 decades. Specifically, the authors analyzed statistics of the "lens model equation" (L. R. Tucker, 1964) associated with 249 different task… (More)
We study the effectiveness of simple heuristics in multiattribute decision making. We consider the case of an additive separable utility function with nonnegative, nonincreasing attribute weights. In this case, cumulative dominance ensures that the so-called cumulative dominance compliant heuristics will choose a best alternative. For the case of binary… (More)
An important problem faced by boundedly rational agents is to identify " regions of rationality, " i.e., the areas for which simple, boundedly rational models are and are not effective. To map the contours of such regions, we derive probabilities that models identify the best of m alternatives (m > 2) characterized by k attributes (k > 1). The models… (More)
The experience sampling method (ESM) was used to collect data from 74 part-time students who described and assessed the risks involved in their current activities when interrupted at random moments by text messages. The major categories of perceived risk were short term in nature and involved "loss of time or materials" related to work and "physical damage"… (More)
Does ethical differentiation of products affect market behavior? We examined this issue in triopolistic experimental markets where producers set prices. One producer's costs were higher than the others. In two treatments, the additional costs were attributed to compliance with ethical guidelines. In the third, no justification was provided. Many consumers… (More)
Excess entry – or the high failure rate of market-entry decisions – is often attributed to overconfidence exhibited by entrepreneurs. We show analytically that whereas excess entry is an inevitable consequence of imperfect assessments of entrepreneurial skill, it does not imply overconfidence. Judgmental fallibility leads to excess entry even when everyone… (More)
two anonymous referees, and many participants in the NSF/Berkeley Econometrics Lab conference on elicitation of preferences, July/August 1997. Angela Hung provided meticulous research assistance.