When it comes to predicting people's preferences, it pays to consider 'the power of three'
In his 1927 paper, "A law of comparative judgment," the American psychologist L. L. Thurstone proposed that when people select one option among multiple alternatives, they are picking the one that has the highest value to them, even though they cannot assign a particular number to that choice.
In his 1927 paper, L. L. Thurstone suggested that when individuals choose among multiple options, they select the one that holds the greatest value for them, even though they cannot quantify that preference. Thurstone's work laid the foundation for what are now known as random utility models (RUMs), which offer a mathematical framework to describe human preferences and make predictions about various hypothetical situations.
However, recent research has revealed that there is potential for improvement in how RUMs are currently estimated. The standard method, which involves pairwise comparisons, does not account for correlations between choices, potentially leading to inaccurate predictions. A study by MIT researchers demonstrated that correlations can be discerned when individuals rate three alternatives in their preferred order, or by combining best-of-three and best-of-two choices.
This finding could enhance the accuracy of predictions in various fields, such as government and industry decision-making, by leveraging the correlations between different preferences.
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