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Optimal conflict in preference assessment

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Conflict arises in decision-making when the choice alternatives present strong advantages and disadvantages over one another, that is, when the trade-offs involved are large. Conflict affects human response to choice, in particular it increases decision difficulty and response unreliability. On the other hand, larger trade-offs, i.e. higher conflict, reveal more information about an individual’s preferences and mitigate the influence of measurement unreliability on preference model estimation. This suggests, somewhat counter intuitively, that there may exist some optimal level of conflict for efficient measurement of preferences. How to determine this level? This issue is examined from behavioral and analytical angles. The author outlines a general analysis and demonstrates its application on a simple example. The analysis developed here can be conveniently implemented in a computer spreadsheet and would be especially valuable when large amounts of preference data are to be collected, as in consumer preference studies, experimental research, and contingent valuation surveys.

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en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2001/2001-53.pdf

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Copyright INSEAD. All rights reserved