The advantage model: A comparative theory of evaluation and choice under risk

A descriptive model of choice between monetary lotteries-called the Advantage Model of Choice-is proposed. According to the model, people evaluate lotteries in a choice problem by comparing them separately on the dimension of gains and on the dimension of losses. In making these comparisons, people employ both “absolute” and “comparative” strategies that are subsequently combined to yield a choice. The model is evaluated on both qualitative and quantitative grounds. As part of the qualitative evaluation, a number of previously documented phenomena that characterize people′s choices between lotteries are reviewed. It is shown that the Advantage Model is consistent with these phenomena. As part of the quantitative evaluation, three experimental tests of the model are reported. The model′s ability to predict both individual choice and group preference is evaluated, and the model is shown to compare favorably to particular versions of Prospect Theory and Utility Theory. It is suggested that the Advantage Model captures one of the underlying processes that guide human choice behavior in risky situations. Examples of the model′s relevance to nonmonetary domains are provided.