Embracing Chance Tactically: A Different Perspective on Risk Taking

Although they value certainty, people are willing to take risks to avoid losses. Consequently, they are risk‐seeking in the domain of losses but risk‐avoidant in the domain of gains. This behavior, frequently demonstrated in framing experiments, is traditionally explained in terms of prospect theory. We suggest a different account whereby involving chance in one's decisions may serve a strategic impression‐formation function. In the domain of losses actors may embrace chance to distance themselves from the outcomes and deflect possible blame. Given potential gains, however, actors may avoid uncertainty to enhance their association with valued outcomes. We test this idea by manipulating the level of actors' personal responsibility for the decision outcomes. The results of four studies consistently showed that when personal responsibility is high, the original framing effect is replicated (i.e., greater risk‐taking when choices are framed in terms of losses rather than gains). However, when because of assigned role or decision circumstances, actors experience low personal responsibility for the outcomes, and the classic framing effect is eliminated. Copyright © 2016 John Wiley & Sons, Ltd.     

用文字概率衡量不确定性：特征和问题

文字概率是衡量不确定性的方式之一, 即人们使用诸如“也许”、“未必”的词汇来描述特定事件发生的可能性。文字概率不同于数字概率, 主要体现在文字概率的模糊性、非概率运算性和语义特性上。这使得相对于数字概率, 用文字概率衡量不确定性既有优势也有问题, 进而对人们的不确定信息沟通和风险决策造成影响。虽然文字概率与数字概率存在特征上的差异并且人们在日常交流中偏爱文字概率, 但是大部分风险领域的研究却仅局限于数字概率, 今后有必要研究使用文字概率测量的风险决策。在已有文字概率特征研究的基础上, 还可以进一步探究其不同于数字概率的其它特征(文字/数字概率与双系统模型的联系、文字概率的跨文化差异等)及其对风险决策的影响。     

Applying prospect theory to pilot weather-related decision-making: The impact of monetary and time considerations on risk taking behaviour

One of the key findings of prospect theory is that people tend to treat potential gains differently to potential losses. Consistent with earlier findings across a range of areas, pilots were risk averse when faced with an uncertain situation involving monetary gains and risk seeking when faced with a monetary loss. Prospect theory has largely been used to explore monetary decision-making; however, “time” is potentially a more important consideration for pilots than money. For example, how much time can be flown with the current fuel onboard. It was found that pilots' decision behaviour changed when faced with a decision involving time, with pilots risk averse for both a time gain and a time loss situation. Pilots appeared to prefer to know precisely the time required for a journey, rather than take a gamble on a potential short cut. Evidence also suggests pilots were more likely to take risks in situations that they perceive they have more control over (e.g. air traffic delays) compared to dynamic weather-related events. There was some evidence to suggest pilots do not consider a decision in terms of an end state, but rather in terms of losses and gains from their current state. The final part of the study found evidence that it may be possible to predict pilot risk taking behaviour using self-report decision frames.     

Principles in judgment/decision making research pertinent to legal proceedings

Principles in the judgment/decision making literature relevant to the legal community are reviewed. These principles are divided into four areas: the decision process itself, communicating a judgment to others, evaluating a decision, and possible ways of “debiasing.” Several influences on the decision process are enumerated, among them being insufficient consideration of base rates, selective memory for relevant material, the framing of the decision in either the domain of losses or the domain of gains, and consideration of the “cues to causation.” Particular attention is paid to suboptimal consideration of covariation information. In communicating the decision to others the two most prominent findings are overconfidence in expressing one's decision and the inability to describe accurately the bases of one's decision. Evaluating a decision is plagued by two biases. The first is the hindsight bias. After an event has occurred we tend to exaggerate how easily we could have predicted the event beforehand. The second is the outcome bias. We tend to base our evaluation of the decision upon the evaluation of the outcome. Among the debiasing techniques mentioned are the admonition to “consider the opposite” of the preferred option, the reduction of reliance on memory, and the use of decision aids.     

Neural correlates of adaptive decision making for risky gains and losses

Do decisions about potential gains and potential losses require different neural structures for advantageous choices? In a lesion study, we used a new measure of adaptive decision making under risk to examine whether damage to neural structures subserving emotion affects an individual's ability to make adaptive decisions differentially for gains and losses. We found that individuals with lesions to the amygdala, an area responsible for processing emotional responses, displayed impaired decision making when considering potential gains, but not when considering potential losses. In contrast, patients with damage to the ventromedial prefrontal cortex, an area responsible for integrating cognitive and emotional information, showed deficits in both domains. We argue that this dissociation provides evidence that adaptive decision making for risks involving potential losses may be more difficult to disrupt than adaptive decision making for risks involving potential gains. This research further demonstrates the role of emotion in decision competence.     

A Range-Frequency Explanation of Shifting Reference Points in Risky Decision Making

An integration of range-frequency theory, a theory of psychophysical judgment, and prospect theory, a theory of choice behavior under risk, is proposed. A critical assumption of prospect theory is that the reference point, which helps govern the riskiness of choice behavior, is modeled after Helson′s (1964) adaptation level notion. It is proposed that range-frequency theory provides a better representation of the reference point and, thus, can be used to understand with greater precision the judgment of outcomes as gains or losses and the perceived riskiness of subsequent decisions. A computer-based decision task was performed using 199 graduate and undergraduate students. Hypotheses concerning range and frequency effects on the reference point were fully supported. The judgment hypotheses were generally supported under gains, but received inconsistent support under losses. Range and frequency effects on choice were consistent with predictions under both gains and losses with one exception. Implications of this work for previous and future research involving prospect theory are discussed.     

Loss aversion in the eye and in the heart: The autonomic nervous system's responses to losses

The common view in psychology and neuroscience is that losses loom larger than gains, leading to a negativity bias in behavioral responses and Autonomic Nervous System (ANS) activation. However, evidence has accumulated that in decisions under risk and uncertainty individuals often impart similar weights to negative and positive outcomes. We examine the role of the ANS in decisions under uncertainty, and its consistency with the behavioral responses. In three studies, we show that losses lead to heightened autonomic responses, compared to equivalent gains (as indicated by pupil dilation and increased heart rate) even in situations where the average decision maker exhibits no loss aversion. Moreover, in the studied tasks autonomic responses were not associated with risk taking propensities. These results are interpreted by the hypothesis that losses signal the subjective importance of global outcome patterns. Copyright © 2010 John Wiley & Sons, Ltd.     

Dissociable effects of basolateral amygdala lesions on decision making biases in rats when loss or gain is emphasized

Individuals switch from risk seeking to risk aversion when mathematically identical options are described in terms of loss versus gains, as exemplified in the reflection and framing effects. Determining the neurobiology underlying such cognitive biases could inform our understanding of decision making in health and disease. Although reports vary, data using human subjects have implicated the amygdala in such biases. Animal models enable more detailed investigation of neurobiological mechanisms. We therefore tested whether basolateral amygdala (BLA) lesions would affect risk preference for gains or losses in rats. Choices in both paradigms were always between options of equal expected value—a guaranteed outcome, or the 50:50 chance of double or nothing. In the loss-chasing task, most rats exhibited strong risk seeking preferences, gambling at the risk of incurring double the penalty, regardless of the size of the guaranteed loss. In the betting task, the majority of animals were equivocal in their choice, irrespective of bet size; however, a wager-sensitive subgroup progressively shifted away from the uncertain option as the bet size increased, which is reminiscent of risk aversion. BLA lesions increased preference for the smaller guaranteed loss in the loss-chasing task, without affecting choice on the betting task, which is indicative of reduced risk seeking for losses, but intact risk aversion for gains. These data support the hypothesis that the amygdala plays a more prominent role in choice biases related to losses. Given the importance of the amygdala in representing negative affect, the aversive emotional reaction to loss, rather than aberrant estimations of probability or loss magnitude, may underlie risk seeking for losses.     

Linguistic–Numeric Presentation Mode Effects on Risky Option Preferences

In this study, we examine preferences between lotteries with chances presented either numerically or linguistically. Presentation mode is predicted to affect preferences due to the perception of linguistic chance as skewed distributions of risk. Based upon weighting functions incorporating risk/uncertainty aversion from ambiguity theory and cumulative prospect theory, we predict that presentation mode effects on risky choices will be detectable in very small risks and in large risks. In two experiments, subjects chose between both gain and loss lotteries with constant payoffs and equivalent numeric and linguistic chances. Presentation mode affected choices when chances were above 50%, where lotteries with numeric chances were more frequently preferred in gains while lotteries with linguistic chances were more often preferred in losses. The effect of presentation mode for low-chance lotteries (5% and less) also affected choices such that numeric choices were generally preferred more frequently in losses and linguistically expressed choices were generally preferred more often in gains. Overall, these results suggest that theories of the effects of second order uncertainty on risky choice may be used to model decisions involving linguistic risk. They also suggest that the study of the perception of linguistic risk assessments can provide insight into the cognitive processing behind the weighting functions proposed to depict decision under risk and uncertainty. Finally, the results have practical implications since information providers can affect decision makers’ choices by controlling presentation mode in such a way as to alter the relative attractiveness of uncertain events.     

Avoiding negative vs. achieving positive outcomes in hard and prosperous economic times

Three studies suggest that business cycle fluctuations trigger distinct motivational orientations that selectively affect economic judgment and decision making. Economic contractions induce avoidance motivation and affect negative economic sentiment, but leave approach motivation and positive economic sentiment unaffected. In contrast, economic expansions induce approach motivation and positive economic sentiment, but do not affect avoidance motivation or negative economic sentiment (study 1). Moreover, economic contractions induce risk aversion for negative outcomes, but not for positive outcomes, while economic expansions instigate risk seeking for positive outcomes, but not for negative outcomes (study 2). A time-series study based on consumer spending over eight decades mirrors the findings of the experimental studies: The consumption of products associated with avoiding negative outcomes increases during economic contractions, but not during expansions. In contrast, the consumption of products associated with achieving positive outcomes increases in expansions, but is unaffected by contractions (study 3).     

Reducing uncertainty to promote appropriate decisions when facing hazardous phenomena at an active volcano

This study investigated a new direction for improving the decision making of populations at risk in the context of uncertain environmental events, such as volcanic hazards. According to the risk as feelings theory and dual process models, situations with certain outcomes do not necessarily require the use of affect heuristics (e.g., experienced feelings, anticipated emotions) as valid information in the decision‐making process. In the case of difficult decisions with moral dilemmas, certainty could even improve decisions. Thus, using an ecological design with various scenarios depicting upcoming volcanic hazards, we examined whether reducing the uncertainty of lethal threat by conveying certainty in an information campaign could influence decision making and promote a better quality of choice (correct application of the recommendations from the competent authorities). We focused specifically on two populations composed of local people living in the vicinity of an active volcano (Tungurahua volcano, Ecuador) and local scientists. We also examined whether a difficult decision involving a moral dilemma (e.g., leaving people behind so as not to jeopardize one's own life) potentiated this effect, compared to a less difficult situation without a dilemma. We demonstrated that, for local people facing a moral dilemma (difficult decision), the reduction of uncertainty of lethal threat involved a better application of the actual recommendations. These outcomes provided perspectives on improving the applications of the recommendations among local populations at risk in the context of a real risk exposure.     

Do Measures of Executive Functioning and Manipulation of Ego Depletion Predict How University Students Discount Probabilistic Gains and Losses?

Discounting occurs when the subjective value of an outcome is altered because the outcome is delayed or uncertain. Previous research has suggested that how individuals discount delayed gains is related to executive functioning. The present study attempted to extend this relationship to discounting of probabilistic gains and losses, and to examine whether diminishing cognitive resources would impact how participants discounted monetary outcomes. In Experiment 1, university students completed an executive function measure and then a probability-discounting task that involved the hypothetical sum of either $1,000 or $100,000 framed as either a gain or a loss. The executive function of organization was a significant predictor of how participants discounted all four outcomes while motivational drive predicted discounting of losses, but not gains. In Experiment 2, participants completed the same measures with the addition of an ego-depletion task to deplete cognitive resources before making discounting decisions. The executive function of motivational drive and empathy were significant predictors of how participants discounted both loss outcomes. The results suggest that discounting of monetary outcomes is related to the executive function of organization for gains and motivational drive, and empathy for losses. They also support the notion that the discounting of gains may be a distinct process from the discounting of losses.     

Common and distinct factors in decision making under ambiguity and risk: A psychometric study of individual differences

The relation between decision making under ambiguity and risky decision making was examined. In Studies 1 and 2, choices under ambiguity were measured for a large sample receiving an Ellsberg-type Ambiguity-Probability Tradeoff Task. Participants with extreme scores were recruited for Part 2 of each study which consisted of a risky decision making task (Study 1) or a series of decisions under ambiguity in “real life” scenarios (Study 2). Despite a time gap of up to 2 months, individual differences in scores on Part 1 predicted scores on Part 2. In Study 3 participants received in a single session several risky decision making tasks, several measures of decision making under ambiguity, and several personality scales related to uncertainty and decision making style. Taken together, the findings support the existence of a stable dispositional trait to reduce uncertainty in decision making but also task-specific differences related to gains and losses.     

Extreme Outcomes Sway Risky Decisions from Experience

Whether buying stocks or playing the slots, people making real‐world risky decisions often rely on their experiences with the risks and rewards. These decisions, however, do not occur in isolation but are embedded in a rich context of other decisions, outcomes, and experiences. In this paper, we systematically evaluate how the local context of other rewarding outcomes alters risk preferences. Through a series of four experiments on decisions from experience, we provide evidence for an extreme‐outcome rule, whereby people overweight the most extreme outcomes (highest and lowest) in a given context. As a result, people should be more risk seeking for gains than losses, even with equally likely outcomes. Across the experiments, the decision context was varied so that the same outcomes served as the high extreme, low extreme, or neither. As predicted, people were more risk seeking for relative gains, but only when the risky option potentially led to the high‐extreme outcome. Similarly, people were more risk averse for relative losses, but only when the risky option potentially led to the low‐extreme outcome. We conclude that in risky decisions from experience, the biggest wins and the biggest losses seem to matter more than they should. Copyright © 2013 John Wiley & Sons, Ltd.     

Consequences of Regret Aversion: Effects of Expected Feedback on Risky Decision Making

Previous research has considered the question of how anticipated regret affects risky decision making. Several studies have shown that anticipated regret forces participants towards the safe option, showing risk-aversion. We argue that these results are due to the previous confounding of the riskiness of the options with the feedback received. Our design unconfounds these factors, and we predict that participants will always tend to makeregret-minimizingchoices (rather than risk-minimizing choices). We present three experiments using a “choices between equally valued alternatives” paradigm. In these experiments we manipulate whether the risky or safe gamble is the regret-minimizing choice by manipulating which gamble(s) will be resolved. As predicted, participants tend to choose the regret-minimizing gamble in both gains and losses and in both relatively high risk and relatively low risk pairs of gambles. We consider the implications of these results for the role of regret in choice behavior.     

Trajectory of risky decision making for potential gains and losses from ages 5 to 85

The ability to make advantageous decisions in the face of uncertainty is an essential human skill, yet the development of such abilities over the lifespan is still not well understood. In the current study, from childhood through older adulthood, we tracked the developmental trajectory of risk taking for gains and losses, and expected value (EV) sensitivity in risky choices. In the gain domain, risk‐taking decreased consistently across the lifespan. In the loss domain, risk‐taking was relatively constant across ages, a result we attribute to the pervasiveness of loss aversion. EV sensitivity showed an inverted‐U‐shaped function, increasing from childhood to adulthood but then decreasing for the elderly, which occurred for both risky gains and risky losses. This finding is consistent with neuropsychological and neuroanatomical evidence concerning the role of the frontal lobe in decision making, which is relatively late to develop during childhood but may degrade earlier in the later years. Copyright © 2010 John Wiley & Sons, Ltd.     

Subjective valuation and asymmetrical motivational systems: implications of scope insensitivity for decision making

Studies using the Iowa Gambling Task have revealed individual differences in performance on the task. In this study, we tested the hypothesis that approach and avoidance motivations influence decision making through the process of subjective valuation. We examined the implications of a high sensitivity to gains or losses from two perspectives which we labeled scalar multiplication and valuation by feeling. Using two versions of the Iowa Gambling Task, we find evidence supporting the view that asymmetry in the systems regulating approach and avoidance leads to systematic biases that translate to differences in performance. Specifically, we find that high sensitivity in the Behavioral Activation System (BAS) translates to valuation by feeling and insensitivity to scope in the domain of gains, while high sensitivity in the Behavioral Inhibition System (BIS) translates to valuation by feeling and insensitivity to scope in the domain of losses. The basis for these findings is discussed. Copyright © 2007 John Wiley & Sons, Ltd.     

Gambling for Gatorade: risk-sensitive decision making for fluid rewards in humans

Determining how both humans and animals make decisions in risky situations is a central problem in economics, experimental psychology, behavioral economics, and neurobiology. Typically, humans are risk seeking for gains and risk averse for losses, while animals may display a variety of preferences under risk depending on, amongst other factors, internal state. Such differences in behavior may reflect major cognitive and cultural differences or they may reflect differences in the way risk sensitivity is probed in humans and animals. Notably, in most studies humans make one or a few choices amongst hypothetical or real monetary options, while animals make dozens of repeated choices amongst options offering primary rewards like food or drink. To address this issue, we probed risk-sensitive decision making in human participants using a paradigm modeled on animal studies, in which rewards were either small squirts of Gatorade or small amounts of real money. Possible outcomes and their probabilities were not made explicit in either case. We found that individual patterns of decision making were strikingly similar for both juice and for money, both in overall risk preferences and in trial-to-trial effects of reward outcome on choice. Comparison with decisions made by monkeys for juice in a similar task revealed highly similar gambling styles. These results unite known patterns of risk-sensitive decision making in human and nonhuman primates and suggest that factors such as the way a decision is framed or internal state may underlie observed variation in risk preferences between and within species.     

Message framing and color priming: How subtle threat cues affect persuasion

Message framing involves the presentation of equivalent decision outcomes in terms of either gains or losses. Loss-framed messages tend to be more persuasive than gain-framed messages when the decision is perceived to involve uncertainty or threat. The current study examined whether the effectiveness of loss-framed information would be enhanced by the presence of a peripheral threat cue - the color red - which was expected to prime threat via its association with blood and danger. In addition to being primed with the color red or gray (control), male participants (n = 126) read either a gain- or loss-framed pamphlet promoting human papillomavirus vaccination. As predicted, vaccination intentions were higher among participants exposed to a loss-framed message than to a gain-framed message, but only when primed with red (not gray). Findings shed light on the interactive effects of message framing and color priming, and demonstrate that peripheral threat cues may affect processing of persuasive health messages.     

Good or Bad,We Want it Now: Fixed‐cost Present Bias for Gains and Losses Explains Magnitude Asymmetries in Intertemporal Choice

Intertemporal tradeoffs are ubiquitous in decision making, yet preferences for current versus future losses are rarely explored in empirical research. Whereas rational‐economic theory posits that neither outcome sign (gains vs. losses) nor outcome magnitude (small vs. large) should affect delay discount rates, both do, and moreover, they interact: in three studies, we show that whereas large gains are discounted less than small gains, large losses are discounted more than small losses. This interaction can be understood through a reconceptualization of fixed‐cost present bias, which has traditionally described a psychological preference for immediate rewards. First, our results establish present bias for losses—a psychological preference to have losses over with now. Present bias thus predicts increased discounting of future gains but decreased (or even negative) discounting of future losses. Second, because present bias preferences do not scale with the magnitude of possible gains or losses, they play a larger role, relative to other motivations for discounting, for small magnitude intertemporal decisions than for large magnitude intertemporal decisions. Present bias thus predicts less discounting of large gains than small gains but more discounting of large losses than small losses. The present research is the first to demonstrate that the effect of outcome magnitude on discount rates may be opposite for gains and losses and also the first to offer a theory (an extension of present bias) and process data to explain this interaction. The results suggest that policy efforts to encourage future‐oriented choices should frame outcomes as large gains or small losses. Copyright © 2012 John Wiley & Sons, Ltd.