Journal Articles

Criteria instability and the isolated option effect

2008, Organizational Behavior and Human Dec Proc

Mauricio Palmeira, H. Shanker Krishnan

Abstract

In two-stage choices, decision makers often compare a new (isolated) option with the winner from the first stage. Previous research has identified a choice advantage for an isolated option, ostensibly due to loss aversion. We propose an alternative mechanism suggesting that instability of the criteria used in each choice stage is the main driver of the isolated option effect. Results from a series of experiments support the criteria instability account and not loss aversion as the explanation for the isolated option effect.

Citation

Palmeira, Mauricio and H. Shanker Krishnan (2008), “Criteria instability and the isolated option effect,” Organizational Behavior and Human Decision Processes, 106(2), 153-167.

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Kelley School of Business

Faculty & Research