Scale convergence and utility measurement

In order to investigate derived scales for the utility, or subjective value of money, subjects were instructed to perform four tasks: in two tasks, they judged “ratios” and “differences” of strengths of preference for monetary amounts; in two other tasks, they judged the values of gambles from buyer's or seller's points of view. The two arrays of data for “ratios” and “differences” were consistent with the hypothesis that most subjects used only one operation to compare monetary amounts, although a few subjects appeared to use two operations. The buyer's and seller's prices would lead to two different utility functions for money under expected utility theory, subjective expected utility theory, or any theory that is additive across outcomes. However, configural-weight utility theory can predict these changes in rank order with an invariant utility function, by postulating that the configurai weight of the smaller amount depends on point of view. The data also reveal systematic violations of dominance (monotonicity) that can be described by assuming that the configurai weight of zero, when it is the lower value, has smaller weight at low probabilities than nonzero outcomes. Disregarding the minority of subjects who appeared to utilize two operations for judging “ratios” and “differences” in utility, the majority of the data can be well-approximated using a single scale of utility, the subtractive model for “ratio” and “difference” comparisons, and the configurai weight, rank-dependent model for buyer's and seller's prices.