Abstract:

In classical decision theory, choices are guided by the principle of value maximization, such that when offered a set of attributes or dimensions, a decision maker chooses the option with the highest value (value-based choice). In real life, however, people often choose options that will make them suffer a loss. To explain this behavior, Tang (2012) and Zheng (2012) proposed and demonstrated a so-called “worth-based choice” model, in which the decision maker chooses the option with the highest “worth” rather than the highest “value”. To explore what gives an option its worth, and to study the rationale underlying such a choice, we conducted two substudies, as described below. In Study 1, we created two scenarios — one in which a decision maker makes a “value-based choice” and the other in which a decision maker makes a “worth-based choice.” We recruited 134 subjects and assessed their responses to the two decision makers’ choices as a means of comparing the latent benefits associated with each type of choice. We found that decision makers who had suffered an offered loss when applying the “worth-based choice” would gain more in the long term by securing the good opinions of others. In contrast, decision makers who had maximized their immediate benefits by making a “value-based choice” would be subject to revenge or punishment later. These findings suggest that it is potential or deferred benefit that may lead people to make “worth-based choices”. Study 2 consisted of two substudies. The first study explored the underlying dimensions constantly considered by decision makers when assessing each option’s worth to make a “worth-based choice” (Study 2a). The second study examined the linear correlation between “worth-based choice” and real benefit (Study 2b) in a real-world setting. In Study 2a, a random sample of undergraduates and employees (N = 72) was surveyed to collect typical cases of “worth-based choices.” Exploratory factor analysis was then conducted with a random sample of 224 undergraduates and employees (aged between 18 and 60), and four factors (i.e., 惠(favor), 善(virtuous), 义(righteousness) and 法(law)) underlying “worth-based choice” were extracted. The four-factor construct was further proved to be reliable and valid by the results of a confirmatory factor analysis. In Study 2b, we used a sample of 178 salespersons in the real estate and pharmaceutical industries to compare the latent benefits generated by “value-based choice” and “worth-based choice”. The results confirmed our hypothesis that individuals who made a “worth-based choice” would gain more benefit later. We concluded that, in the “worth-based choice” model, though an individual may suffer an offered loss in the short term, he might gain more benefit in the long term. In the process, we managed to explain, for the first time, the philosophy reflected in a Chinese proverb, “chi kui shi fu” (suffering a loss is a blessing). The implications of the present study are also discussed.

Key words: suffering a loss, worth-based choice, value-based choice, value maximization