Abstract

http://ssrn.com/abstract=929930
 
 

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When Is More Better? On the Relationship Between Magnitude and Subjective Value


Christopher K. Hsee


University of Chicago - Booth School of Business

Yuval Rottenstreich


University of Chicago - Booth School of Business

Zhixing Xiao


China Europe International Business School (CEIBS)


Current Trend in Psychological Science, Vol. 14, No. 5, 2005

Abstract:     
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 relevantmagnitude 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.

Number of Pages in PDF File: 4

Keywords: utility function, prospect theory, evaluability, scope-insensitivity, experienced utility, joint evaluation, separate evaluation

JEL Classification: D81, D11, D12, D91

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Date posted: October 11, 2006  

Suggested Citation

Hsee, Christopher K. and Rottenstreich, Yuval and Xiao, Zhixing, When Is More Better? On the Relationship Between Magnitude and Subjective Value. Current Trend in Psychological Science, Vol. 14, No. 5, 2005. Available at SSRN: http://ssrn.com/abstract=929930

Contact Information

Christopher K. Hsee (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
Yuval Rottenstreich
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
Zhixing Xiao
China Europe International Business School (CEIBS) ( email )
Shanghai 201206
China
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