The Priority Heuristic: Making Choices Without Trade-offs

Abstract

Bernoulli's framework of expected utility serves as a model for various psychological processes, including motivation, moral sense, attitudes, and decision making. To account for evidence at variance with expected utility, we generalize the framework of fast and frugal heuristics from inferences to preferences. The priority heuristic predicts (i) Allais' paradox, (ii) risk aversion for gains if probabilities are high, (iii) risk seeking for gains if probabilities are low (lottery tickets), (iv) risk aversion for losses if probabilities are low (buying insurance), (v) risk seeking for losses if probabilities are high, (vi) certainty effect, (vii) possibility effect, and (viii) intransitivities. We test how accurately the heuristic predicts people's choices, compared to previously proposed heuristics and three modifications of expected utility theory: security-potential/aspiration theory, transfer-of-attention-exchange model, and cumulative prospect theory.Conventional wisdom tells us that making decisions becomes difficult whenever multiple priorities, appetites, goals, values, or simply the attributes of the alternative options are in conflict. Should one undergo a medical treatment that has some chance of curing a lifethreatening illness but comes with the risk of debilitating side effects? Should one report a crime committed by a friend? Should one buy an expensive, high-quality camera or an inexpensive, low-quality camera? How do people resolve conflicts, ranging from the prosaic to the profound?The common denominator of many theories of human behavior is the premise that conflicts are mastered by making trade-offs. Since the Enlightenment, it has been believed that weighting and summing are the processes by which such trade-offs can be made in a rational way. Numerous theories of human behavior-including expected value theory, expected utility theory, prospect theory, Benjamin Franklin's moral algebra, theories of moral sense such as utilitarianism and consequentionalism (Gigerenzer, 2004), theories of risk taking (e.g., Wigfield & Eccles, 1992), motivational theories of achievement (Atkinson, 1957) and work behavior (e.g., Vroom, 1964), theories of social learning (Rotter, 1954), theories of attitude formation (e.g., Fishbein & Ajzen, 1975), and theories of health behavior (e.g., Becker, 1974; for a review see Heckhausen, 1991)-rest on these two processes. Take how expected utility theory would account for the choice between two investment plans as an example. The reasons for choosing are often negatively correlated with one another. High returns go with low probabilities, and low returns go with high probabilities. According to a common argument, negative correlations between reasons cause people to experience conflict, leading them to make trade-offs (Shanteau & Thomas, 2000). Europe PMC Funders Author ManuscriptsEurope PMC Funders Author Manuscripts utility, the trade-off between investment plans is performed by weighting the utility of the respective monetary outcomes by their probabilities and...

Prospect theory reflects selective allocation of attention.

“…Research linking measures of attention to process models of choice (in particular, variants of drift diffusion models) has primarily addressed asymmetries in the allocation of attention between options (e.g., Krajbich, Armel, & Rangel, 2010;Mullett & Stewart, 2016; but see Diederich & Oswald, 2016;Fisher, 2017). Differences in attention to individual attributes, in contrast, have rarely been considered in risky choice (but see Brandstätter et al, 2006;Johnson & Busemeyer, 2016). Last but not least, establishing CPTattention links would point to potential attentional covariates of individual differences in choice, and it would also suggest avenues for shaping people's decisions.…”

Does the brain calculate value?

“…For example, in the ‗priority heuristic' [14,50] one prospect is preferred over the other if they differ sufficiently in the minimum gain. If tied on minimum gain, the probability of the minimum gain is considered.…”

A rank-dependent expected utility model for strategic route choice with stated preference data

“…One relatively unexplored avenue is the application of process models, such as the Priority Heuristic approach proposed by Brandstatter et al (2006). Process models attempt to model the actual decision-making process of an individual traveler.…”