Yuval Rottenstreich - Academia.edu (original) (raw)

Uploads

Papers by Yuval Rottenstreich

Research paper thumbnail of Incorporating Behavioral Anomalies in Strategic Models

Marketing Letters, 2005

Behavioral decision researchers have documented a number of anomalies that seem to run counter to... more Behavioral decision researchers have documented a number of anomalies that seem to run counter to established theories of consumer behavior from microeconomics that are often at the core of analytical models in marketing. A natural question therefore is how equilibrium behavior and strategies would change if models were to incorporate these anomalies in a consistent way. In this paper we identify several important and generalizable anomalies that modelers may want to incorporate in their models. We briefly discuss each phenomenon, identify a key unresolved issue and outline a research agenda to be pursued. 362 NARASIMHAN ET AL.

Research paper thumbnail of Unpacking, repacking, and anchoring: Advances in support theory

Psychological Review, 1997

Support theory represents probability judgment in terms of the support, or strength of evidence, ... more Support theory represents probability judgment in terms of the support, or strength of evidence, of the focal relative to the alternative hypothesis. It assumes that the judged probability of an event generally increases when its description is unpacked into disjoint components ...

Research paper thumbnail of On the Psychology of Loss Aversion: Possession, Valence, and Reversals of the Endowment Effect

Journal of Consumer Research, 2007

Loss aversion states that "losses loom larger than gains." We consider two types of loss aversion... more Loss aversion states that "losses loom larger than gains." We consider two types of loss aversion defined by two interpretations of loss. A loss can be defined (1) in terms of valence or (2) in terms of possession. Correspondingly, valence loss aversion (VLA) entails greater sensitivity to negative (vs. positive) changes, and possession loss aversion (PLA) entails greater sensitivity to items leaving (vs. entering) one's possession. Both types of loss aversion imply an endowment effect for attractive items, but PLA implies a reversal of the endowment effect for unattractive items. Experimental results show endowment effect reversals consistent with PLA.

Research paper thumbnail of On Decisions That Lead to Decisions: Direct and Derived Evaluations of Preference

Journal of Consumer Research, 2004

Research paper thumbnail of Similarity between Hypotheses and Evidence

Cognitive Psychology, 1999

We explore two novel consequences of similarity-based likelihood judgment. In Section I, we disti... more We explore two novel consequences of similarity-based likelihood judgment. In Section I, we distinguish between the evidence on which judgments are based and the hypotheses that serve as the objects of judgment. The location of a feature, whether in the evidence or the hypotheses, influences the perceived similarity between evidence and hypotheses and consequently yields judgments that are inconsistent with the requirements of probability theory. In Section II, we examine judgment of disjunctive hypotheses. For certain types of disjunctions, the assessment of similarity produces consistent nonmonotonicities: the support of a disjunction is smaller than that of one of its components. Finally, we discuss the implications of our findings in terms of support theory and the principle of context independence.

Research paper thumbnail of Comparison, Grouping, and Preference

Psychological Science, 1999

Abstract How does the attractiveness of a particular option depend on comparisons drawn between i... more Abstract How does the attractiveness of a particular option depend on comparisons drawn between it and other alternatives? We observe that in many cases, comparisons hurt: When the options being compared have both meaningful advantages and meaningful ...

Research paper thumbnail of Focus, repacking, and the judgment of grouped hypotheses

Journal of Behavioral Decision Making, 1999

Previous research has found that judged probabilities of two complementary singleton hypotheses s... more Previous research has found that judged probabilities of two complementary singleton hypotheses sum to one. However, there may be important dierences between judgment of singleton and disjunctive hypotheses. We suggest that because of a general preference for singletons as the focus of judgment, disjunctions are more likely to be repacked into singletons when focal than when alternative. This prediction of dierential repacking implies that a given disjunction will be perceived as less likely when focal. Thus, we predict that when disjunctions are under consideration, the sum of judged probabilities for two complementary hypotheses will be less than one. We observe this pattern in judgment of both probability and relative frequency, and for both externally-generated and selfgenerated hypotheses.

Research paper thumbnail of Feeling and Thinking in Memory-Based versus Stimulus-Based Choices

Journal of Consumer Research, 2007

We contrast memory-based and stimulus-based choices, using dual-process theories such as Kahneman... more We contrast memory-based and stimulus-based choices, using dual-process theories such as Kahneman and Frederick's system 1/system 2 dichotomy. Systems 1 and 2 are conceptualized as distinct modes of thought, the former automatic and affective, the latter controlled and deliberate. Cognitive load impedes system 2, yielding greater reliance on system 1. In memory-based choice, consumers must maintain relevant options in working memory. Thus, memory-based choices are associated with greater cognitive load than stimulus-based choices. Indeed, we find that memory-based choices favor immediately compelling, affect-rich system 1 options, whereas stimulus-based choices favor affect-poor options whose attractiveness emerges from deliberative system 2 thought.

Research paper thumbnail of When Is More Better?On the Relationship Between Magnitude and Subjective Value

Current Directions in Psychological Science, 2005

We examine three determinants of the relationship between the magnitude of a stimulus and a perso... more We examine three determinants of the relationship between the magnitude of a stimulus and a person's subjective ''value'' of the stimulus: the process by which value is assessed (either by feeling or by calculation), the evaluability of the relevant magnitude variable (whether the desirability of a given level of that variable can be evaluated independently), and the mode of evaluation (whether stimuli are encountered and evaluated jointly or separately). Reliance on feeling, lack of evaluability, and single evaluation lead to insensitivity to magnitude. An analysis invoking these factors provides a novel account for why people typically become less sensitive to changes in the magnitude of a stimulus as the magnitude increases.

Research paper thumbnail of Money, Kisses, and Electric Shocks: On the Affective Psychology of Risk

Psychological Science, 2001

Prospect theory's S-shaped weighting function is often said to reflect the psychophysics of chanc... more Prospect theory's S-shaped weighting function is often said to reflect the psychophysics of chance. We propose an affective rather than psychophysical deconstruction of the weighting function resting on two assumptions. First, preferences depend on the affective reactions associated with potential outcomes of a risky choice. Second, even with monetary values controlled, some outcomes are relatively affect-rich and others relatively affect-poor. Although the psychophysical and affective approaches are complementary, the affective approach has one novel implication: Weighting functions will be more S-shaped for lotteries involving affect-rich than affect-poor outcomes. That is, people will be more sensitive to departures from impossibility and certainty but less sensitive to intermediate probability variations for affect-rich outcomes. We corroborated this prediction by observing probability-outcome interactions: An affect-poor prize was preferred over an affect-rich prize under certainty, but the direction of preference reversed under low probability. We suggest that the assumption of probability-outcome independence, adopted by both expected-utility and prospect theory, may hold across outcomes of different monetary values, but not different affective values.

Research paper thumbnail of Suboptimal Choices and the Need for Experienced Individual Well-Being in Economic Analysis

Research paper thumbnail of Music, Pandas, and Muggers: On the Affective Psychology of Value

Journal of Experimental Psychology-general, 2004

This research investigated the relationship between the magnitude or scope of a stimulus and its ... more This research investigated the relationship between the magnitude or scope of a stimulus and its subjective value by contrasting 2 psychological processes that may be used to construct preferences: valuation by feeling and valuation by calculation. The results show that when people rely on feeling, they are sensitive to the presence or absence of a stimulus (i.e., the difference between 0 and some scope) but are largely insensitive to further variations of scope. In contrast, when people rely on calculation, they reveal relatively more constant sensitivity to scope. Thus, value is nearly a step function of scope when feeling predominates and is closer to a linear function when calculation predominates. These findings may allow for a novel interpretation of why most real-world value functions are concave and how the processes responsible for nonlinearity of value may also contribute to nonlinear probability weighting.

Research paper thumbnail of Incorporating Behavioral Anomalies in Strategic Models

Marketing Letters, 2005

Behavioral decision researchers have documented a number of anomalies that seem to run counter to... more Behavioral decision researchers have documented a number of anomalies that seem to run counter to established theories of consumer behavior from microeconomics that are often at the core of analytical models in marketing. A natural question therefore is how equilibrium behavior and strategies would change if models were to incorporate these anomalies in a consistent way. In this paper we identify several important and generalizable anomalies that modelers may want to incorporate in their models. We briefly discuss each phenomenon, identify a key unresolved issue and outline a research agenda to be pursued. 362 NARASIMHAN ET AL.

Research paper thumbnail of Unpacking, repacking, and anchoring: Advances in support theory

Psychological Review, 1997

Support theory represents probability judgment in terms of the support, or strength of evidence, ... more Support theory represents probability judgment in terms of the support, or strength of evidence, of the focal relative to the alternative hypothesis. It assumes that the judged probability of an event generally increases when its description is unpacked into disjoint components ...

Research paper thumbnail of On the Psychology of Loss Aversion: Possession, Valence, and Reversals of the Endowment Effect

Journal of Consumer Research, 2007

Loss aversion states that "losses loom larger than gains." We consider two types of loss aversion... more Loss aversion states that "losses loom larger than gains." We consider two types of loss aversion defined by two interpretations of loss. A loss can be defined (1) in terms of valence or (2) in terms of possession. Correspondingly, valence loss aversion (VLA) entails greater sensitivity to negative (vs. positive) changes, and possession loss aversion (PLA) entails greater sensitivity to items leaving (vs. entering) one's possession. Both types of loss aversion imply an endowment effect for attractive items, but PLA implies a reversal of the endowment effect for unattractive items. Experimental results show endowment effect reversals consistent with PLA.

Research paper thumbnail of On Decisions That Lead to Decisions: Direct and Derived Evaluations of Preference

Journal of Consumer Research, 2004

Research paper thumbnail of Similarity between Hypotheses and Evidence

Cognitive Psychology, 1999

We explore two novel consequences of similarity-based likelihood judgment. In Section I, we disti... more We explore two novel consequences of similarity-based likelihood judgment. In Section I, we distinguish between the evidence on which judgments are based and the hypotheses that serve as the objects of judgment. The location of a feature, whether in the evidence or the hypotheses, influences the perceived similarity between evidence and hypotheses and consequently yields judgments that are inconsistent with the requirements of probability theory. In Section II, we examine judgment of disjunctive hypotheses. For certain types of disjunctions, the assessment of similarity produces consistent nonmonotonicities: the support of a disjunction is smaller than that of one of its components. Finally, we discuss the implications of our findings in terms of support theory and the principle of context independence.

Research paper thumbnail of Comparison, Grouping, and Preference

Psychological Science, 1999

Abstract How does the attractiveness of a particular option depend on comparisons drawn between i... more Abstract How does the attractiveness of a particular option depend on comparisons drawn between it and other alternatives? We observe that in many cases, comparisons hurt: When the options being compared have both meaningful advantages and meaningful ...

Research paper thumbnail of Focus, repacking, and the judgment of grouped hypotheses

Journal of Behavioral Decision Making, 1999

Previous research has found that judged probabilities of two complementary singleton hypotheses s... more Previous research has found that judged probabilities of two complementary singleton hypotheses sum to one. However, there may be important dierences between judgment of singleton and disjunctive hypotheses. We suggest that because of a general preference for singletons as the focus of judgment, disjunctions are more likely to be repacked into singletons when focal than when alternative. This prediction of dierential repacking implies that a given disjunction will be perceived as less likely when focal. Thus, we predict that when disjunctions are under consideration, the sum of judged probabilities for two complementary hypotheses will be less than one. We observe this pattern in judgment of both probability and relative frequency, and for both externally-generated and selfgenerated hypotheses.

Research paper thumbnail of Feeling and Thinking in Memory-Based versus Stimulus-Based Choices

Journal of Consumer Research, 2007

We contrast memory-based and stimulus-based choices, using dual-process theories such as Kahneman... more We contrast memory-based and stimulus-based choices, using dual-process theories such as Kahneman and Frederick's system 1/system 2 dichotomy. Systems 1 and 2 are conceptualized as distinct modes of thought, the former automatic and affective, the latter controlled and deliberate. Cognitive load impedes system 2, yielding greater reliance on system 1. In memory-based choice, consumers must maintain relevant options in working memory. Thus, memory-based choices are associated with greater cognitive load than stimulus-based choices. Indeed, we find that memory-based choices favor immediately compelling, affect-rich system 1 options, whereas stimulus-based choices favor affect-poor options whose attractiveness emerges from deliberative system 2 thought.

Research paper thumbnail of When Is More Better?On the Relationship Between Magnitude and Subjective Value

Current Directions in Psychological Science, 2005

We examine three determinants of the relationship between the magnitude of a stimulus and a perso... more We examine three determinants of the relationship between the magnitude of a stimulus and a person's subjective ''value'' of the stimulus: the process by which value is assessed (either by feeling or by calculation), the evaluability of the relevant magnitude variable (whether the desirability of a given level of that variable can be evaluated independently), and the mode of evaluation (whether stimuli are encountered and evaluated jointly or separately). Reliance on feeling, lack of evaluability, and single evaluation lead to insensitivity to magnitude. An analysis invoking these factors provides a novel account for why people typically become less sensitive to changes in the magnitude of a stimulus as the magnitude increases.

Research paper thumbnail of Money, Kisses, and Electric Shocks: On the Affective Psychology of Risk

Psychological Science, 2001

Prospect theory's S-shaped weighting function is often said to reflect the psychophysics of chanc... more Prospect theory's S-shaped weighting function is often said to reflect the psychophysics of chance. We propose an affective rather than psychophysical deconstruction of the weighting function resting on two assumptions. First, preferences depend on the affective reactions associated with potential outcomes of a risky choice. Second, even with monetary values controlled, some outcomes are relatively affect-rich and others relatively affect-poor. Although the psychophysical and affective approaches are complementary, the affective approach has one novel implication: Weighting functions will be more S-shaped for lotteries involving affect-rich than affect-poor outcomes. That is, people will be more sensitive to departures from impossibility and certainty but less sensitive to intermediate probability variations for affect-rich outcomes. We corroborated this prediction by observing probability-outcome interactions: An affect-poor prize was preferred over an affect-rich prize under certainty, but the direction of preference reversed under low probability. We suggest that the assumption of probability-outcome independence, adopted by both expected-utility and prospect theory, may hold across outcomes of different monetary values, but not different affective values.

Research paper thumbnail of Suboptimal Choices and the Need for Experienced Individual Well-Being in Economic Analysis

Research paper thumbnail of Music, Pandas, and Muggers: On the Affective Psychology of Value

Journal of Experimental Psychology-general, 2004

This research investigated the relationship between the magnitude or scope of a stimulus and its ... more This research investigated the relationship between the magnitude or scope of a stimulus and its subjective value by contrasting 2 psychological processes that may be used to construct preferences: valuation by feeling and valuation by calculation. The results show that when people rely on feeling, they are sensitive to the presence or absence of a stimulus (i.e., the difference between 0 and some scope) but are largely insensitive to further variations of scope. In contrast, when people rely on calculation, they reveal relatively more constant sensitivity to scope. Thus, value is nearly a step function of scope when feeling predominates and is closer to a linear function when calculation predominates. These findings may allow for a novel interpretation of why most real-world value functions are concave and how the processes responsible for nonlinearity of value may also contribute to nonlinear probability weighting.