Framing decisions: Hypothetical and real

This paper addresses the general issue of whether the practice of investigating human decision making in hypothetical choice situations is at all warranted, or under what conditions. A particularly relevant factor that affects the match between real decisions and hypothetical decisions is the importance of a decision’s consequences. In the literature experimental gambles tend to confound the reality of the decision situation with the size of the payoffs: hypothetical decisions tend to offer large payoffs, and real decisions tend to offer only small payoffs. Using the well-known framing effect (a tendency of risk-aversion for gains and of risk-seeking for losses) we find that the framing effect depends on payoff size but hypothetical choices match real choices for small as well as large payoffs. These results appear paradoxical unless size of incentive is clearly distinguished from the reality status of decision (real versus hypothetical). Since the field lacks a general theory of when hypothetical decisions match real decisions, the discussion presents an outline for developing such a theory.     

Decision making, risk taking and psychological time: Review of empirical findings and psychological theory

Three domains of research (1) involvement in past and future events, (2) knowledge of the past and the future, and (3) value as a function of time (discounting) were used to elucidate man's limitations when he makes decisions based on earlier experience with consequences in the close and distant future. Evidence from all three areas illustrate that man is captured in a narrow time-space sphere around "here and now".—One consequence of this limitation is that risk-willingness increases the longer ahead the outcome of a decision is likely to occur. To specify, the less we are involved in, the less we know of and the less the consequences are evaluated the larger is our willingness to make decisions with future risks. Learning from experience seems to play a minor role in improving decision making. Ill-defined problems and non-distinct outcomes make "economic man" fairly useless as a norm for decision making in decisions with longranging effects and of a non-repititive character.—The paper ends with a discussion of strategies that can compensate for the limitations of distal cognition.     

Second Thoughts About Decision Reversibility: An Empirical Overview

People generally expect that having the opportunity to reverse a decision contributes to the quality of decision‐making. However, previous research has unequivocally shown that reversible decisions actually yield lower levels of post‐choice satisfaction and higher levels of regret than irreversible decisions. Only recently, research has begun to investigate the underlying processes explaining these counterintuitive and detrimental consequences of decision reversibility. In the present paper, we will review and integrate this research and distinguish a number of important cognitive and motivational consequences of decision (ir)reversibility. With this paper, we aim to inspire future research into the discrepancy between people's wish for reversibility on the one hand and their need for irreversibility on the other.     

Comparing Risky Decision Making Under Conditions of Real and Hypothetical Consequences

In a series of three experiments, subjects made risky decisions under conditions of hypothetical or real consequences. Task variations across experiments included: (1) type of risk (monetary gambles or investments of time and effort), (2) within-subject and between-subjects manipulations of consequence condition, and (3) single or multiple decisions. The hypothesis of no difference between choices in real and hypothetical consequence conditions was retained in each experiment. Supplemental analyses ruled out various “artifactual” interpretations of the null results. Discussion focused on conditions in which researchers can and cannot infer decision makers’ actual risk preferences from their responses in laboratory tasks.     

Ceding and Succeeding: How the Altruistic Can Benefit from the Selfish in Joint Decisions

We examine how the interplay of two partners’ interpersonal orientations (selfish vs. altruistic) in a decision‐making dyad impacts the extent to which the joint decision matches each partners’ individual a priori preferences. Two experiments, in which we manipulate and measure interpersonal orientations, as well as examine real consumption decisions, demonstrate the benefit of mismatching interpersonal orientations (selfish‐altruistic) in dyadic decisions. Specifically, altruistic and selfish consumers reach joint decisions that better reflect their individual preferences when working with a partner who has the opposite interpersonal orientation (heterogeneous dyad) versus a matching one (homogeneous dyad). Initial evidence suggests that this effect occurs because homogeneous dyads are more prone to engage in negotiation (communication that involves departure from one's initial position to a mutually serving position) than heterogeneous dyads. This leads homogeneous dyads to focus more on equally preferred options than on their own most preferred options, which pushes them further down both partners’ preferences lists. This research contributes to the literature on joint decision making and has important implications for consumer well‐being.     

How effortful decisions get enacted: the motivating role of decision processes,desires, and anticipated emotions

Building on recent research examining the influence of decision making on subsequent goal striving and decision enactment, we consider and elaborate on the mechanisms through which effortful decisions are made, maintained, and enacted. Our proposed framework builds on the Dholakia and Bagozzi ( 2002 ) model, distinguishes between two important types of intentions and desires, and shows that the motivation‐mustering function of the decision process is mediated by goal and implementation desires. In addition to decision processes, the roles of goal feasibility, anticipated emotions, attitudes, subjective norms, and perceived behavioral control are also elaborated on. Through a two‐wave field study tracking real decisions and their pursuit by participants, we find empirical support for our model of effortful decision making and enactment. Copyright © 2003 John Wiley & Sons, Ltd.     

Keeping one's options open: The detrimental consequences of decision reversibility

People generally prefer to have the opportunity to revise their decisions. Surprisingly however, research has shown that keeping one's options open yields lower satisfaction with the decision outcome (Gilbert & Ebert, 2002). Two studies aimed to gain more insight into the detrimental consequences of decision reversibility and the cognitive processes underlying decision reversibility. Building upon literature on goal fulfillment we hypothesized and found in a first experiment that as long as decisions are still open to change, accessibility of decision-related constructs is increased compared to neutral constructs. A second experiment demonstrated that decision reversibility undermines working memory capacity. Moreover participants experienced higher regret after having made a reversible decision, an effect that was mediated by decreased working memory capacity. The study set implies that reversible decisions yield lower working memory capacity because people continue to think about the, still relevant, choice options. In the end this might increase dissatisfaction with the decision and regret.     

No One Wants to Look Cheap: Trade‐Offs Between Social Disincentives and the Economic and Psychological Incentives to Redeem Coupons

Existing research on price deals has largely demonstrated positive financial and nonfinancial consequences of obtaining a deal. In contrast, the research reported here suggests that certain price deals—in this case, coupons—can also produce negative social consequences, such as creating an impression of cheapness or stinginess. Decisions to redeem coupons are shown to involve a trade‐off between the social incentives to avoid coupons and competing economic and psychological incentives to redeem coupons. Consumers strategically adjusted their decision in response to factors that changed the relative strength of these incentives; specifically, they avoided coupons when they were concerned that coupon use would lead to negative social consequences but redeemed coupons when the circumstances reduced these concerns. Although decisions to refuse a coupon might violate principles of economic rationality, it is argued that such decisions are nevertheless functional as they serve important social goals. In this sense, it can be smarter for consumers to forgo a deal rather than obtain one.     

Bailing and jailing the fast and frugal way

Legal decisions such as the decision to bail upon adjourning a case have major consequences for both defendants and society. In the English system, magistrates, most of whom are lay people, are afforded considerable discretion and must work under constraints such as time pressure. Judgment analysis of the bail decision making policies of 81 magistrates from 44 courts throughout England and Wales revealed intra‐ and inter‐magistrate inconsistency in bail decisions, discrepancies between stated and elicited cue use, and high levels of post‐decisional confidence. Furthermore, magistrates' policies were better described and predicted by a fast and frugal model characterized by noncompensatory cue use, than by either of two compensatory integration models. The fast and frugal model portrays a picture of bail decision making that conflicts with the ideal practice as defined by the due process model of justice. We discuss the implications of these findings for judgment and decision making research and criminal justice policy. Copyright © 2001 John Wiley & Sons, Ltd.     

What Do We Do Unconsciously? And How?

In this reply, we endorse Chartrand's (2005) taxonomy of conscious awareness for different stages of consumer decisions affected by environmental cues. In addition, we attempt to broaden the scope of this taxonomy by discussing its usefulness for consumer decisions in general. We generally support Simonson's (2005) claim that research based on consumers as conscious decision makers is indeed predictive of a wide variety of behavior. However, we also argue that the importance of consciousness should not be overstated. Conscious processes observed in a research laboratory are not representative of conscious processes in real life. The alternative model to describe effects of the environment on behavior by Janiszewski and van Osselaer (2005) may be useful to explain automaticity in goal‐directed behavior, but it poorly describes other automatic behaviors.     

Memories of real-life decisions

Three studies investigated decision makers' memory representations of choice alternatives in most important real-life decisions. In Study 1, each participant recalled the most important decision that she or he had ever made and rated to what degree a number of characteristics could describe the decisions. In Study 2, the participants were asked to think about an important decision that they had made during the last 7-10 days. In Study 3, the memory representations of decisions of a group of action-oriented participants were compared with those of a group of state-oriented participants (Kuhl, 1983). Characteristics related to standard decision theory, like consequences, values, and likelihood, had high ratings of applicability as well as affect/feeling. When testing the applicability of a circumplex model, the fuzzy-trace theory of memory, and differences between state- and action-oriented decision makers, we found (1) that there was no support for the circumplex model of emotions. Instead, an important decision problem was characterised by both positive and negative affect/emotion and thus, a bipolar mapping was found inadequate; (2) that a comparison of abstract and concrete aspects showed that the abstract characteristics scored higher, thereby supporting the fuzzy-trace theory; and (3) that the prediction that action-oriented participants would score higher than state-oriented participants on the characteristic of activity was not supported. However, state-oriented decision makers rated passivity higher than action-oriented decision makers for the important decision of leaving a partner. State-oriented decision makers used perceptual/cognitive scenario representations to a greater extent than action-oriented participants. Finally, it was stressed that in the development of decision theories it is essential to find theoretical representations as close as possible to how decision makers themselves represent the decisions. The method used in this contribution is focused on the role of memory in decision making and gives further insights into how important real-life decisions are represented by different decision makers.     

The role of motivation and volition in economic decisions: Evidence from eye movements and pupillometry

Economic decisions usually involve high stakes, real consequences, and some degree of personal risk. This article explores the impact of motivational and volitional states on economic decision processes in an incentivized lottery choice task. We investigated the patterns of decision time, choice, information search, and pupil dilation dependent on an experimental manipulation of motivation and volition, that is, the deliberative and the implemental mindset. The results indicated that choice preferences in economic decisions were robust and remained unaffected by motivational and volitional states, but decision processes were notably impacted. Decision makers in a deliberative state of mind searched for information more extensively and made slower decisions than the baseline. The implemental mindset was associated with more attention paid to the probability attributes of the gambles relative to the deliberative mindset. Furthermore, we observed that gamble outcomes that entailed no win at all (i.e., zero outcomes) played an important role for information search. These outcomes were largely disregarded in terms of predecisional information search but elicited pupillary responses similar to very high outcome lotteries. These results inform the current debate about the zero effect in risky choice. We also discuss the potential of eye-tracking studies of risky choice to dissolve ambiguities concerning the contributions of effort and arousal to modulating pupillary response. Implications for theoretical advances in decision research are discussed.     

"Leaky" Rationality: How Research on Behavioral Decision Making Challenges Normative Standards of Rationality

ABSTRACT— For more than 30 years, decision-making research has documented that people often violate various principles of rationality, some of which are so fundamental that theorists of rationality rarely bother to state them. We take these characteristics of decision making as a given but argue that it is problematic to conclude that they typically represent departures from rationality. The very psychological processes that lead to "irrational" decisions (e.g., framing, mental accounting) continue to exert their influence when one experiences the results of the decisions. That is, psychological processes that affect decisions may be said also to "leak" into one's experience. The implication is that formal principles of rationality do not provide a good enough normative standard against which to assess decision making. Instead, what is needed is a substantive theory of rationality—one that takes subjective experience seriously, considers both direct and indirect consequences of particular decisions, considers how particular decisions fit into life as a whole, and considers the effects of decisions on others. Formal principles may play a role as approximations of the substantive theory that can be used by theorists and decision makers in cases in which the formal principles can capture most of the relevant considerations and leakage into experience is negligible.     

No Time to Waste: Restricting Life‐Span Temporal Horizons Decreases the Sunk‐Cost Fallacy

In three studies, we examined the influence of restricted and expansive temporal horizons on the sunk‐cost fallacy. The sunk‐cost fallacy occurs when prior investments instead of future returns influence decisions about future investments. When making decisions about future investments, rational decision makers base decisions on future consequences, not already‐invested costs that are “sunk” and cannot be recovered. In Study 1, we restricted young adult college students' temporal horizons by instructing them to imagine that they did not have much longer to live; this manipulation decreased the sunk‐cost fallacy. In Study 2, we replicated Study 1 and also found that the consequences of manipulating temporal horizons were most pronounced for prior investments of time and that prior investments of time and money had different implications for the sunk‐cost fallacy, depending on the social or nonsocial decision domain. In Study 3, we manipulated temporal horizons by instructing students to imagine their time as a college student was coming to an end. Results were mostly similar to Study 2 but also suggested that focusing on one's mortality may have unique consequences. Implications of the three studies for understanding age differences in sunk‐cost decisions, interventions to improve sunk‐cost decisions, and the situations in which interventions might be most needed are discussed. Copyright © 2013 John Wiley & Sons, Ltd.     

“Mindless” Decision Making as a Failure of Contextual Reasoning

People often make decisions without reference to vital information, even when such information is readily available. In the present research, the authors addressed the possibility that this tendency may derive from failure to have pertinent information immediately available in the decision context. Participants rated the utility of decisions in either the presence or absence of simple pertinent information. The information provided required no training and was relatively obvious (e.g., if money is spent on a given item, that money will not be available for other expenditures). Presentation of such information in the immediate context of decisions significantly improved participants' abilities to understand their negative consequences. These results indicate that the presentation of pertinent information in immediate decision contexts, even information that is already available through participants' long-term memory, can improve the understanding of decision situations and reduce “mindlessness” in decision processes.     

Forecasting and Ethical Decision Making: What Matters?

This study examined how the number and types of consequences considered are related to forecasting and ethical decision making. Undergraduate participants took on the role of the key actor in several ethical problems and were asked to forecast potential outcomes and make a decision about each problem. Performance pressure was manipulated by ostensibly making rewards contingent on good problem-solving performance. The results indicated that forecast quality was associated with decision ethicality, and the identification of the critical consequences of the problem and consequences for others were associated with both higher quality forecasts and more ethical decisions. In addition, the identification of a larger number of consequences was negatively associated with ethical decision making. Performance pressure did not impact forecast quality or ethicality of decisions. Theoretical and practical implications of these findings are discussed.     

Aging and decision‐making competence: an analysis of comprehension and consistency skills in older versus younger adults considering health‐plan options

Older adults need to maintain strong decision‐making capabilities as they age. However, we know little about how age‐related physical and psychological changes affect older adults' judgment and decision processes. This paper reports the results of research comparing older versus younger adults' performance on evaluation and choice tasks about health‐plan options. In particular, comprehension and consistency in judgments (across separate versus joint evaluation contexts) were examined. Results indicated that increasing age was related to greater comprehension errors and inconsistent preferences, even when covariates (education, income, gender, self‐perceived skill and health, decision style, and attitude toward delegation) were taken into account. Discussion of the results emphasizes difficulties in interpreting the meaning of age differences in performance on decision tasks and the need for research that ascertains the seriousness of the consequences of age differences in real‐life tasks. The implications for providing decision‐aiding interventions for older adults are highlighted. Copyright © 2002 John Wiley & Sons, Ltd.     

Processes of patient decision making: Theoretical and methodological issues

Abstract

There is a paucity of research studying patients' decision making processes. Traditional normative approaches investigating human decision have presented rational, analytic processing as a ‘gold standard’ for decision making with decision aids developed to facilitate such thinking. This paradigm has been challenged by the recent emergence of naturalistic decision making. Naturalistic approaches argue for techniques modelled closer to how decisions are actually made in ‘real life’. Early work in this evolving field suggests the importance of more automatic, intuitive processing such as the use of heuristic short-cuts. This paper discusses the contribution of naturalistic decision theory and assesses its usefulness as an alternative to classical decision approaches in investigating patient decision making. Approaches for measuring underlying cognitive processes are also critically discussed.