Maximizing Utility or Avoiding Losses? Uncovering Decision Rule-Heterogeneity in Sociological Research with an Application to Neighbourhood Choice

Ulf Liebe*, Sander van Cranenburgh, Caspar Chorus

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

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Abstract

Empirical studies on individual behaviour often, implicitly or explicitly, assume a single type of decision rule. Other studies do not specify behavioural assumptions at all. We advance sociological research by introducing (random) regret minimization, which is related to loss aversion, into the sociological literature and by testing it against (random) utility maximization, which is the most prominent decision rule in sociological research on individual behaviour. With an application to neighbourhood choice, in a sample of four European cities, we combine stated choice experiment data and discrete choice modelling techniques and find a considerable degree of decision rule-heterogeneity, with a strong prevalence of regret minimization and hence loss aversion. We also provide indicative evidence that decision rules can affect expected neighbourhood demand at the macro level. Our approach allows identifying heterogeneity in decision rules, that is, the degree of regret/loss aversion, at the level of choice attributes such as the share of foreigners when comparing neighbourhoods, and can improve sociological practice related to linking theories and social research on decision-making.
Original languageEnglish
JournalSociological Methods and Research
DOIs
Publication statusPublished - 2023

Keywords

  • decision rules
  • loss aversion
  • rational choice
  • regret minimization
  • stated choice experiment
  • utility maximization

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