Explaining heterogeneity in utility functions by individual differences in decision modes

• Published in: Journal of economic psychology Vol. 27; no. 3; pp. 386 - 401
• Main Authors: Schunk, Daniel, Betsch, Cornelia
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.06.2006; Elsevier Science; Elsevier; Elsevier Sequoia S.A
• Series: Journal of Economic Psychology
• Subjects: Biological and medical sciences; Cognition. Intelligence; Consumer behaviour; Customers; Decision making; Decision making. Choice; Economic psychology; Fundamental and applied biological sciences. Psychology; Individual differences; Intuition; Logic; Psychological aspects; Psychology. Psychoanalysis. Psychiatry; Psychology. Psychophysiology; Risk; Risky decisions; Studies; Utility function elicitation; Utility functions; Utility theory; Value; Value function; Risky decisions; Value function; Individual differences; C91; 3120; Utility function elicitation; Intuition; D81; 2360; Human; Value; Risk taking; Decision making; Utility function; Interindividual comparison
• ISSN: 0167-4870; 1872-7719
• DOI: 10.1016/j.joep.2005.08.003

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. In this study the utility functions of the subjects were assessed using a lottery-based elicitation method and related to the relative preference for intuition vs. deliberation. We found that people who prefer the deliberative mode have a utility function that is more linear than the utility function of people who prefer the intuitive mode. We suggest that intuitive people’s decisions mirror a feeling of risk and lead to behavior which is not risk neutral. They may have additionally integrated affective reactions towards the stimuli into the decision biasing their decision towards the affective reaction. Deliberate decision-makers seem to perform time consuming cognitive operations (apparently not just calculation) leading to more risk neutral decisions and a more linear utility function.