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FOX Craig

  • Anderson School of Management, UCLA, Los Angeles, United States of America
  • Social sciences

Recommendations:  0

Review:  1

Educational and work
judgment and decision making

Review:  1

09 Jun 2022
STAGE 1
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Revisiting diversification bias and partition dependence: Replication and extensions of Fox, Ratner, and Lieb (2005) Studies 1, 2, and 5

Testing the replicability of diversification bias and partition dependence

Recommended by based on reviews by Craig Fox and Leo Cohen
When offered a range of options and asked to make multiple selections, how do people choose? Over the last 30 years, a key finding to emerge from behavioural economics is that people distribute their choices more evenly than would be considered optimal – a phenomenon termed “diversification bias” or the “diversification heuristic” (Read & Loewenstein, 1995). For example, when filling a plate from a buffet, you might be inclined to choose a relatively even amount of everything on offer, even when you prefer some foods over others. Similarly, when allocating savings among different investment options, people are prone to spreading their money more evenly than would maximise utility.
 
In an influential study, Fox et al. (2005) found that diversification bias can be shaped by so-called “partition dependence” – the tendency to allocate resources differently across options depending on how they are subjectively grouped. Such groupings could be arbitrary; so, for example, to return to the buffet example, people might diversify across high-level categories such as cooked and uncooked, savoury and sweet, or surf and turf, and then diversify across the options within those categories. The nature of level of these subjective (and potentially arbitrary) categorisations can strongly influence the final allocation of resources. Diversification bias and partition dependence have important implications for basic theory in judgment and decision-making as well as applications in behavioral economics and finance.
 
In the current study, Li and Feldman (2022) propose to replicate Studies 1, 2 and 5 from Fox et al. (2002) in a large online sample. In particular, they plan to ask how partitioning influences the allocation of choices between options, and the extent to which partition dependence is reduced in people with greater relevant expertise. The authors also propose extending the original study to explore individual differences in the desire for choice diversity as predictors of partition dependence.
 
The Stage 1 manuscript was evaluated over one round of in-depth review. Based on detailed responses to the reviewers' comments, the recommender judged that the manuscript met the Stage 1 criteria and therefore awarded in-principle acceptance (IPA).
 
URL to the preregistered Stage 1 protocol: https://osf.io/bx8vq
 
Level of bias control achieved: Level 6. No part of the data or evidence that will be used to answer the research question yet exists and no part will be generated until after IPA. 
 
List of eligible PCI RR-friendly journals:
 
 
References
 
1. Read, D., & Loewenstein, G. (1995). Diversification bias: Explaining the discrepancy in variety seeking between combined and separated choices. Journal of Experimental Psychology: Applied, 1, 34-49. https://doi.org/10.1037/1076-898X.1.1.34
 
2. Fox, C. R., Ratner, R. K., & Lieb, D. S. (2005). How subjective grouping of options influences choice and allocation: Diversification bias and the phenomenon of partition dependence. Journal of Experimental Psychology: General, 134, 538-551. https://doi.org/10.1037/0096-3445.134.4.538
  
3. Li, M. Y. & Feldman, G. (2022). Revisiting diversification bias and partition dependence: 
Replication and extension of Fox, Ratner, and Lieb (2005) Studies 1, 2, and 5, in principle acceptance of Version 2 by Peer Community in Registered Reports. https://osf.io/bx8vq
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FOX Craig

  • Anderson School of Management, UCLA, Los Angeles, United States of America
  • Social sciences

Recommendations:  0

Review:  1

Educational and work
judgment and decision making