UTILITY MEASUREMENT - CONFIGURAL-WEIGHT THEORY AND THE JUDGES POINT-OF-VIEW

Subjects judged the values of lotteries from 3 points of view: the highest price that a buyer should pay, the lowest price that a seller should accept, and the "fair" price. The rank order of judgments changed as a function of point of view. Data also showed violations of branch independence and monotonicity (dominance). These findings pose difficulties for nonconfigural theories of decision making, such as subjective expected utility theory, but can be described by configural-weight theory. Configural weighting is similar to rank-dependent utility theory, except that the weight of the lowest outcome in a gamble depends on the viewpoint, and 0-valued outcomes receive differential weighting. Configural-weight theory predicted the effect of viewpoint, the violations of branch independence, and the violations of monotonicity, using a single scale of utility that is independent of the lottery and the point of view.