Regret aversion and decision process quality: Effects of regret salience on decision process carefulness

A considerable amount of past research has examined the effects of regret aversion on which options decision makers choose. However, past research has largely neglected to address the effect of regret aversion on the decision process. We conducted five experiments to examine the effect of making regret salient on decision process quality. We predicted that increased regret aversion would lead to more careful decision processing. The results consistently supported this prediction across the different decision situations, incentive structures, regret salience manipulations, and dependent variables used. In all experiments making regret salient led decision makers to take significantly longer to reach a decision. In Studies 2a, 2b, and 4 it also led participants to collect significantly more information before making a choice. Implications and future directions are discussed.     

Decisions from experience: How groups and individuals adapt to change

Whether groups make better judgments and decisions than individuals has been studied extensively, but most of this research has focused on static tasks. How do groups and individuals compare in settings where the decision environment changes unexpectedly and without notification? This article examines group and individual behavior in decisions from experience where the underlying probabilities change after some trials. Consistent with the previous literature, the results showed that groups performed better than the average individual while the decision task was stable. However, group performance was no longer superior after a change in the decision environment. Group performance was closer to the benchmark of Bayesian updating, which assumed perfect memory. Findings suggest that groups did not adopt decision routines that might have delayed their adaption to change in the environment. Rather, they seem to have coordinated their responses, which led them to behave as if they had better memory and subsequently delayed adaptation.     

What lies beneath: Reframing framing effects

Decision framing concerns how individuals build internal representations of problems and how these determine the choices that they make. Research in this area has been dominated by studies of the framing effect, showing reversals in preference associated with the form in which a decision problem is presented. While there are studies that fail to reveal this effect, there is at present no theory that can explain why and when the effect occurs. The purpose of this article is to present a selective review of research and use this to argue for a new framework for considering decision framing, to interpret past studies, and to set an agenda for future research. A simple information-processing model is developed. The model provides the basis for arguing that previous research has taken too narrow a view of how decision problems are internally represented and how these representations are transformed into choice behaviour. In addition, the model is used to highlight the importance of decision content and context.     

A Model of Financial Incentive Effects in Decision Making

This paper proposes a model of the mediating processes whereby performance-contingent financial incentives influence decision quality and provides empirical evidence relevant to assessing the model. We hypothesize that performance-contingent incentives impact both cognitions and emotions, and that these cognitive and affective changes mediate the relationship between incentives and decision quality. To test these hypotheses, 84 undergraduate students were randomly assigned to conditions in which financial incentives were either performance contingent or randomly distributed. Participants used software that collected data on their information processing behavior to make choices from multiattribute choice information displays. After completing their choices, participants′ level of negative affect was assessed. Consistent with the predictions of the model, participants offered performance-contingent incentives took longer to choose, examined more information, had higher levels of negative affect, and used decision strategies that led to more accurate choices than participants offered randomly distributed incentives. Path analyses using structural equations modeling indicated that the changes in information processing behavior induced by financial incentives increased decision quality, while the increased levels of negative affect associated with incentives decreased decision quality. The paper concludes that identifying and measuring mediating variables is an important component of a research agenda designed to generate predictive theory of the relationship between financial incentives and decision quality.     

Beyond gains and losses: the effect of need on risky choice in framed decisions

Substantial evidence suggests people are risk-averse when making decisions described in terms of gains and risk-prone when making decisions described in terms of losses, a phenomenon known as the framing effect. Little research, however, has examined whether framing effects are a product of normative risk-sensitive cognitive processes. In 5 experiments, it is demonstrated that framing effects in the Asian disease problem can be explained by risk-sensitivity theory, which predicts that decision makers adjust risk acceptance on the basis of minimal acceptable thresholds, or need. Both explicit and self-determined need requirements eliminated framing effects and affected risk acceptance consistent with risk-sensitivity theory. Furthermore, negative language choice in loss frames conferred the perception of high need and led to the construction of higher minimal acceptable thresholds. The results of this study suggest that risk-sensitivity theory provides a normative rationale for framing effects based on sensitivity to minimal acceptable thresholds, or needs.     

An Evaluation Study of the Effectiveness of Multi-attribute Decision Support as a Function of Problem Complexity

This study focuses on the evaluation of multi-attribute (MAU) decision support for problems differing in complexity. In this study we compared decision making with a computerized decision support system (DECAID) with the unaided process. Overall, results indicate that MAU support led to a more thorough decision process, had more impact on preference formation, and led to a larger decrease of perceived difficulty of the decision problem as compared to the no-support condition. The MAU decision aid turned out to be less lime efficient than the unaided mode, especially with increasing numbers of alternatives. Results suggest that the MAU decision aid is effective for problems of low and moderate complexity only. For highly complex problems, results are less favorable.     

Modeling experimentally induced strategy shifts

In dynamic decision-making environments, observers must continuously adjust their decision-making strategies. Previous research has focused on internal fluctuations in decision mechanisms, without regard to how these changes are induced by environmental changes. We developed a simple paradigm in which we manipulated task difficulty, thereby inducing changes in decision processes. We applied this paradigm to recognition memory, manipulating task difficulty by changing the similarity of lures to targets. More difficult decision environments caused participants to make more careful decisions, but these changes did not appear immediately. We propose a simple theoretical account for these data, using a dynamic version of signal detection theory fitted to individual subjects. Our model represents a significant departure from existing models because it incorporates subject-controlled parameters that may adjust over time in response to environmental changes.     

Reluctant to change: Self-enhancing responses to diverging performance measures

Although there is extensive evidence that past performance influences the propensity to make changes, research on how decision makers respond to diverging performance measures has been sparse. This paper addresses this gap in an experimental and a field study in which we examine how decision makers respond to the ambiguity introduced by two diverging performance indicators of unequal importance. Both studies suggest that decision makers respond to diverging performance indicators in a self-enhancing manner. Decision makers gave importance to a secondary performance indicator only when it helped them maintain a sense of positive performance, that is, when a secondary performance measure was high and a primary performance measure was low. The results suggest that, in contexts in which decision makers are likely to experience diverging performance indicators, perceptions of success and the associated reluctance to make changes might be more pervasive than is often thought.     

Who Takes the Lead in Risky Decision Making? Effects of Group Members' Risk Preferences and Prototypicality

In two experiments, we studied the effects of (a) the extent to which group members are risk seeking in comparison with others in the group and (b) group member prototypicality (the extent to which individuals hold group-typical risk preferences) on the likelihood that group members will take the lead in risky decision making. Participants were led to believe that they engaged in a four-person group discussion and received bogus feedback about their own risk preferences, the risk preferences of the other group members, and the risk preferences of their group as a whole. In Experiment 2, we also manipulated the framing of the decision problem (gain vs. loss frame). Results supported the hypotheses that (a) more risk seeking members are more likely to take the lead and (b) prototypical members are more likely to take the lead when the problem facing the group is ambiguous (i.e., when group risk preferences and decision framing are incongruent), whereas nonprototypical members are more likely to take the lead when the problem facing the group is relatively clear-cut (i.e., when group risk preferences and decision framing are congruent).     

Even better than the real thing: Alternative outcome bias affects decision judgements and decision regret

Three experiments demonstrated that decisions resulting in considerable amounts of profit, but missed alternative outcomes of greater profits, were rated lower in quality and produced more regret than did decisions that returned lesser (or equal) amounts of profit but either did not miss or missed only slightly better alternatives. These effects were mediated by upward counterfactuals and moderated by participants’ orientation to the decision context. That decision evaluations were affected by the availability and magnitude of alternative outcomes rather than the positivity of actual outcomes is counter to the outcome bias effect—a bias in which decisions are rated more positively when they led to more positive outcomes (despite a priori probabilities associated with the decision outcomes). Experiment 3 demonstrated that these effects represent a bias that occurs even when it is clear that the process by which decisions were made followed rational decision processes. This research suggests that when alternative worlds are even better than the desirable outcomes experienced, affect and cognition may be more strongly linked to the magnitude of alternative realities than to obtained outcomes.     

Problem Representation,Option Generation,and Poliheuristic Theory: An Experimental Analysis

Poliheuristic (PH) theory has received strong empirical support for its depiction of the option selection process: it explains how leaders evaluate, weigh, and ultimately choose among a set of policy options. But PH theory does not explain how this initial set of options is generated. Foreign policy problem representation (PR) research has shown that the way in which leaders mentally represent decision problems determines which options are generated for consideration. In this article, we develop a hybrid PR‐PH framework in which leaders’ problem representations drive an unconscious screening process that occurs prior to the conscious screening of PH stage 1. We test hypotheses drawn from this framework experimentally and find that key elements of PR (most notably, perceived threat) determine which options consciously occur to decision makers and which options are not generated during a simulated foreign policy crisis.     

Perceptual commensuration in decision tables

This paper calls attention to design features that could enhance the helpfulness of the decision table to decision makers trying to get a better intuitive grasp of the choices facing them. The experiments reported here show that the grey scale is more facilitative than the number scale for problem comprehension as measured by the identification of dominance and the identification of non-additivity, each of which requires a view of the decision problem that is sensitive to patterns across attributes. Additional design features that could enhance the decision makers’ grasp of the choices facing them are suggested for further research.     

The Influence of Decision Makers' Goals on Their Concerns About Procedural Justice1

Two studies examine how decision makers' goals of enhancing organizational effectiveness and promoting positive interpersonal relations shape their decision making when they are allocating scarce resources among group members. Past research has conceptualized this problem as one of balancing between the use of two distributive justice principles: equity and equality. The studies reported examine the degree to which authorities are also concerned about issues of procedural justice. The results suggest that experienced decision makers—both managerial and administrative—believe that when trying to maintain positive interpersonal relations it is as important to use decision-making procedures that will be regarded as fair (procedural justice) as it is to allocate outcomes in ways which will be regarded as fair (distributive justice). Decision makers' definitions of procedural justice are also examined.     

The locality and globality of instrumental rationality: the normative significance of preference reversals

When we ask a decision maker to express her preferences, it is typically assumed that we are eliciting a pre-existing set of preferences. However, empirical research has suggested that our preferences are often constructed on the fly for the decision problem at hand. This paper explores the ramifications of this empirical research for our understanding of instrumental rationality. First, I argue that these results pose serious challenges for the traditional decision-theoretic view of instrumental rationality, which demands global coherence amongst all of one’s beliefs and desires. To address these challenges, I first develop a minimal notion of instrumental rationality that issues in localized, goal-relative demands of coherence. This minimal conception of instrumental rationality is then used to offer a more sophisticated account of the global aspects of instrumental rationality. The resulting view abandons all-or-nothing assessments of rationality and allows us to evaluate decision makers as being rational to varying degrees. My aim is to propose a theory that is both psychologically and normatively plausible.     

A New Perspective on Preferential Treatment: The Role of Ambiguity and Self-Efficacy

Knowledge of being selected preferentially has been shown to have negative effects. This study examined how changing the operationalization of preferential treatment to allow for perceptions of ambiguity in the nature of the selection decision may lead to changes in research conclusions. Eighty-four female undergraduates were led to believe they were selected to perform a mathematical task based on their merit, direct preferential treatment, or a more ambiguous or indirect preferential treatment. Results indicated that participants' self-efficacy levels affected their interpretations of the manipulation and performance. Implications for the study of preferential treatment are discussed.     

The uncertainty appraisal enhances the prominent deck B effect in the Iowa gambling task

The Iowa gambling task (Bechara et al., Cognition 50:7–15, 1994) is designed to simulate a decision making problem under ambiguity, in which the degree of reliance on emotional cues arising from previous experiences contributes to perform advantageously. Recent studies based on the appraisal tendency framework demonstrated that emotional certainty (associated with intuitive strategies) leads to a more advantageous decision pattern, whereas emotional uncertainty (associated with deliberative strategies) impairs the performance in the IGT (Bagneux et al., Motivation and Emotion 37(4):818–827, 2013; Bollon and Bagneux, Cognition and Emotion 27(2):376–384, 2013). Due to the problems in the IGT (Dunn et al., Neuroscience and Biobehavioral Reviews 30:239–271, 2006; Steingroever et al., Psychological Assessment 25(1):180–193, 2013), however, it is an open question to what extent the disadvantageous IGT performance in the uncertainty conditions was based on risky decision making. Addressing the main criticisms on the IGT, the primary aim of the present study is to provide a further explanation for the underlying source of the IGT impairment led by uncertainty appraisals. In line with previous research, we found that participants in the certainty-associated emotion condition (disgust) outperformed those in uncertainty-associated conditions (fear, sadness) in the gambling game. Detailed four-deck format analyses on decision patterns and knowledge levels provided supporting evidence for our main hypothesis that the weak IGT scores in the uncertainty conditions can be summarized as a failure to anticipate the badness and the goodness of the most difficult decks, and a dominant preference for a risky option with high immediate gains and infrequent losses.     

Contextual Influences on Omission Neglect in the Fault Tree Paradigm

Fault trees are used to organize potential causes of a problem to facilitate better judgments about potential problem solutions. However, fault trees can lead to biased judgments because decision makers tend to overestimate the likelihood of problem causes that are explicitly mentioned in the fault tree and underestimate the likelihood of problem causes that are not. In this research, we examined the impact of context information and need for cognitive closure on these estimates. In 2 experiments, participants with a low need for cognitive closure used the informational content of experimenter provided and self‐generated context information as a basis for making likelihood estimates. In contrast, participants with a high need for closure did not use experimenter provided context information at all but used the ease of producing self‐generated context information (rather than informational content) as a basis for their likelihood estimates.     

Changing institutional incentives to foster sound scientific practices: One department

Replicable research and open science are of value to our field and to society at large, but most universities provide no incentives to adopt these practices. Instead, current incentive structures favor novel research, which has led to a situation in which few researchers take the time to do replications, share protocols, or share data. Obviously, several approaches to remedy this situation are possible. However, little progress can be made if becoming involved in such activities reduces a researcher’s chances of rank and status advancement and other rewards. I describe in this article the way my department has modified our incentive structure to tackle this problem, including how the changes influence my research as a developmental psychologist. Finally, I offer suggestions for faculty who wish to initiate similar changes in their institutions.