In a recent post, we saw how the medical group rankings for Alice and Bob differed sharply because their individual Preference Profiles differed. There is another way the power of preferences asserts itself. Your preferences alter the market you experience.
Preferences Alter the Market: an Example
In this example, we return to Alice and Bob, and their search for medical groups using real performance results developed and published by The Washington Health Alliance.
In the diagram below, we focus on the top and bottom performers for Alice and Bob, respectively. We want to spotlight differences in the range or variation across all medical groups. Because their Preference Profiles differ, what the market has to offer Alice and Bob differs as well.
Let’s begin with Bob. When we compare the Value Ratings for his best and worst performing medical groups, we see he faces a market with a 6-fold degree of variation. However, for Alice the corresponding figure is a whopping 21-fold difference. Even when ignoring the best and worst performing medical groups for each, Alice still faces a market with nearly double the variation that Bob experiences. And remember: these astounding differences exist when considering the identical slate of choices.
How Can this Be?
Compared to Bob, Alice’s Preference Profile places more emphasis on attributes where higher performance appears to be harder to achieve. We might refer to this as the degree-of-difficulty; some kinds of performance are harder than others. Alice prefers such attributes more, compared to Bob. As a result, Alice sees a market of medical groups with more divergent Value Ratings than does Bob.
This illustration further confirms the shortcomings of static, one-size-fits-all rankings, Top 10 lists, and other inflexible approaches to rating alternatives. Without accounting for individual preferences with Value Ratings, we can easily mislead when we intend to inform.