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

Journal of Experimental Psychology, Vol. 133, No. 1, 2004

8 Pages Posted: 11 Oct 2006  

Christopher K. Hsee

University of Chicago - Booth School of Business

Yuval Rottenstreich

University of Chicago - Booth School of Business

Abstract

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.

Keywords: prospect theory, probability weighting, affect,scope-insensitivity, utility function, value function

JEL Classification: D81, D11, D12, D91

Suggested Citation

Hsee, Christopher K. and Rottenstreich, Yuval, Music, Pandas, and Muggers: On the Affective Psychology of Value. Journal of Experimental Psychology, Vol. 133, No. 1, 2004. Available at SSRN: https://ssrn.com/abstract=929935

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

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