Standardized covariance-A measure of association, similarity and co-riskiness between choice options

Predictions of prominent theories of decision making, such as decision field theory and regret theory, strongly depend on the association between outcomes of choice options. In the present work, we show that these associations reflect the similarity of two choice options and riskiness of one option with respect to the other. We propose a measure labeled standardized covariance that can capture the strength of the association, similarity and co-riskiness between two choice options. We describe the properties and interpretation of this measure and show its similarities to and differences from the correlation measure. Finally, we show how the predictions of different models of decision making vary depending on the value of the standardized covariance, which can have implications for research on decision making under risk. (C) 2014 Elsevier Inc. All rights reserved.