The gap between medical and monetary choices under risk persists in decisions for others

Decisions under risk in the medical domain have been found to systematically diverge from decisions in the monetary domain. When making choices between monetary options, people commonly rely on a decision strategy that trades off outcomes with their probabilities; when making choices between medical options, people tend to neglect probability information. In two experimental studies, we tested to what extent differences between medical and monetary decisions also emerge when the decision outcomes affect another person. Using a risky choice paradigm for medical and monetary decisions, we compared hypothetical decisions that participants made for themselves to decisions for a socially distant other (Study 1) and to recommendations as financial advisor or doctor (Study 2). In addition, we examined people's information search in a condition in which information about payoff distributions had to be learned from experiential sampling. Formal modeling and analyses of search behavior revealed a similarly pronounced gap between medical and monetary decisions in decisions for others as in decisions for oneself. Our results suggest that when making medical decisions, people try to avoid the worst outcome while neglecting its probability—even when the outcomes affect others rather than themselves.     

Evaluating the reliance on past choices in adaptive learning models

Adaptive learning models are used to predict behavior in repeated choice tasks. Predictions can be based on previous payoffs or previous choices of the player. The current paper proposes a new method for evaluating the degree of reliance on past choices, called equal payoff series extraction (EPSE). Under this method a simulated player has the same exact choices as the player but receives equal constant payoffs from all of the alternatives. Success in predicting the next choice ahead for this simulated player therefore relies strictly on mimicry of previous choices of the actual player. This allows determining the marginal fit of predictions that are not based on the actual task payoffs. To evaluate the reliance on past choices under different models, an experiment was conducted in which 48 participants completed a three-alternative choice task in four task conditions. Two different learning rules were evaluated: an interference rule and a decay rule. The results showed that while the predictions of the decay rule relied more on past choices, only the reliance on past payoffs was associated with improved parameter generality. Moreover, we show that the Equal Payoff Series can be used as a criterion for optimizing parameters resulting in better parameter generalizability.     

Comparison of basic assumptions embedded in learning models for experience-based decision making

The present study examined basic assumptions embedded in learning models for predicting behavior in decisions based on experience. In such decisions, the probabilities and payoffs are initially unknown and are learned from repeated choice with payoff feedback. We examined combinations of two rules for updating past experience with new payoff feedback and of two choice rule assumptions for mapping experience onto choices. The combination of these assumptions produced four classes of models that were systematically compared. Two methods were employed to evaluate the success of learning models for approximating players’ choices: One was based on estimating parameters from each person’s data to maximize the prediction of choices one step ahead, conditioned by the observed past history of feedback. The second was based on making a priori predictions for the entire sequence of choices using parameters estimated from a separate experiment. The results indicated the advantage of a class of models incorporating decay of previous experience, whereas the ranking of choice rules depended on the evaluation method used.     

Eyes on the Prize? Evidence of Diminishing Attention to Experienced and Foregone Outcomes in Repeated Experiential Choice

Recently, there has been increased interest in decisions‐from‐experience (where decision makers learn from observing the outcomes of previous choices), which provide valuable insights into the learning and preference construction processes underlying many daily decisions. Several process models have been developed to capture these processes, and while such models often fit the data well, many assume that the decision maker is a vigilant observer, processing each outcome. In two studies, we provide a critical test of this assumption using eye tracking to record directed visual attention when participants choose repeatedly among two options, each time being shown the outcome for their chosen option and for the foregone option. Consistently, we find that the vigilance assumption is not supported, with decision makers often not attending to outcome information. Moreover, (in)attention to outcomes is predictable, with vigilance decreasing as more choices are made, and being greater for obtained than for foregone outcomes, and when options deliver only gains as opposed to losses or a mixture of gains and losses. Furthermore, we find that this variation in attentional allocation plays a central role in the apparent indecisiveness (inconsistency) in choice, with increased attention to foregone outcomes predicting switches to that option on the next choice. Together, these findings highlight the value of eye tracking in investigations of decisions‐from‐experience, providing novel insight into the cognitive processes underlying them. Copyright © 2015 John Wiley & Sons, Ltd.     

Evidence against Rank-Dependent Utility Theories: Tests of Cumulative Independence,Interval Independence,Stochastic Dominance,and Transitivity

This study tests between two modern theories of decision making. Rank- and sign-dependent utility (RSDU) models, including cumulative prospect theory (CPT), imply stochastic dominance and two cumulative independence conditions. Configural weight models, with parameters estimated in previous research, predict systematic violations of these properties for certain choices. Experimental data systematically violate all three properties, contrary to RSDU but consistent with configural weight models. This study also tests whether violations of stochastic dominance can be explained by violations of transitivity. Violations of transitivity may be evidence of a dominance detecting mechanism. Although some transitivity violations were observed, most choice triads violated stochastic dominance without violating transitivity. Judged differences between gambles were not consistent with the CPT model. Data were not consistent with the editing principles of cancellation and combination. The main findings are interpreted in terms of coalescing, the principle that equal outcomes can be combined in a gamble by adding their probabilities. RSDU models imply coalescing but configural weight models violate it, allowing configural weighting to explain violations of stochastic dominance and cumulative independence.     

The effect of foregone payoffs on underweighting small probability events

Foregone payoffs add information about the outcomes for alternatives that are not chosen. The present paper examines the effect of foregone payoffs on underweighting rare but possible events in repeated choice tasks. Previous studies have not demonstrated any long‐lasting effects of foregone payoffs (following repeated presentation of a task) when foregone payoffs do not add much information. The present paper highlights the conditions and the contributing factors for the occurrence of such long‐lasting effects. An experimental study compares the effect of foregone payoffs under different degrees of rarity of the negative payoff. It is demonstrated that foregone payoffs increase the selection from risky alternatives with extremely rare and highly negative outcomes, and that this effect does not diminish with repeated presentation of the task. These findings can be summarized using a surprisingly simple reinforcement‐learning model. The findings are discussed in the context of the potential long‐term effect of social learning. Copyright © 2006 John Wiley & Sons, Ltd.     

Stochastic choice models: A comparison between Bush-Mosteller and a source-independent reward-following model

Horner and Staddon (1987) argued that a class of reward-following processes defined by a property they termed ratio invariance is a better model for the probabilistic choice performance of pigeons than competing molecular accounts such as momentary maximizing, melioration, and the Bush-Mosteller model. The critical data were provided by choice distributions-distributions of a variable S, the proportion of Right choices, defined on a moving window typically 32 choices long-obtained under a frequency-dependent schedule. The schedule prescribed equal payoff probabilities, p(S), for both choices. p(S) was a maximum when S = 0.5 and declined linearly for S values above and below 0.5. Pigeons showed generally bimodal choice distributions with the modes at equal p(S) values. These data do not follow easily from melioration or momentary maximizing and are inconsistent with molar maximizing, but they may be consistent with Bush-Mosteller. We present here the results of computer simulations showing that the ratio-invariance model studied yields, as expected, choice modes at equal p(S) values, but that Bush-Mosteller, although capable of generating bimodal choice distributions, does not have choice modes at equal p(S) values.     

Piece of cake? Allocating rewards to third parties when fairness is costly

Reactions to third-party inequality were investigated in three experiments. In Experiment 1, 52 undergraduates allocated money between themselves and two others. Preferences for equal and unequal distributions were also rated. The results show that people are averse to inequalities between themselves and others, and to inequalities between others. Post-experimental ratings indicate that egocentric equality, third-party equality, and max–min preferences are important motives. The findings were replicated in Experiment 2, where 74 undergraduates allocated compensation for a previously conducted task, and in Experiment 3, where 112 participants rated preferences. In these experiments random determination of rewards to third parties altered participants’ behavior and preferences. The results indicated that random determination decreases the importance of all fairness motives while increasing the importance of monetary payoff. While people still care about economic equality under these conditions, contextual factors, such as perceived responsibility for unfair outcomes, seem to alter the impact of fairness.     

Decisions from experience: Why small samples?

In many decisions we cannot consult explicit statistics telling us about the risks involved in our actions. In lieu of such data, we can arrive at an understanding of our dicey options by sampling from them. The size of the samples that we take determines, ceteris paribus, how good our choices will be. Studies of decisions from experience have observed that people tend to rely on relatively small samples from payoff distributions, and small samples are at times rendered even smaller because of recency. We suggest one contributing and previously unnoticed reason for reliance on frugal search: Small samples amplify the difference between the expected earnings associated with the payoff distributions, thus making the options more distinct and choice easier. We describe the magnitude of this amplification effect, and the potential costs that it exacts, and we empirically test four of its implications.     

Replicated alternatives and the role of confusion,chasing, and regret in decisions from experience

The current paper explores choice among alternatives that can be classified into distinct classes. All the members of a particular class were ‘replicated alternatives’: they promised the same payoff distribution. Information to decision makers was limited to feedback concerning the realized (obtained and foregone) payoffs. Experiment 1 demonstrates that increasing the number of replicated alternatives creates confusion (which facilitates random choice) and changes the implications of the tendency to chase recent returns (i.e., select the alternative with the best recent outcomes). This effect, termed ‘confused chasing,’ facilitates risk seeking even when this behavior impairs expected earnings. Experiment 2 reveals that increasing the number of replicated alternatives can reduce (but does not eliminate) the tendency to underweight rare events. Experiment 3 shows that the relative importance of chasing and confusion is sensitive to the likelihood of realizing lower payoffs than the forgone payoffs. The main results are summarized with a simple model assuming that payoff sensitivity decreases with experienced regret. Copyright © 2006 John Wiley & Sons, Ltd.     

Doomed to repeat the successes of the past: History is best forgotten for repeated choices with nonstationary payoffs

Many everyday tasks involve repeated choices in which past outcomes are used to estimate payoffs but in which present payoffs may differ from past ones. Two experiments with 10 decision problems employing the decisions-from-feedback paradigm examined the choice between two risky options, wherein the payoff probabilities for one option could change over a sequence of trials. Participants either saw the outcomes associated with each option, or additionally were given a “history” summarizing the outcomes of previous trials. Participants adapted quickly to new problems, but adapted slowly to payoff changes. Providing a history improved initial choices, but had a null or negative impact on later ones—although, appropriately, the summary received less weight in later trials. An associative choice model captured changes in preference, but not initial patterns of choice. The findings emphasize the adaptive value of forgetting in unstable decision environments, but illustrate how providing additional relevant information may hinder this.     

Decision processes in discrimination: fundamental misrepresentations of signal detection theory.

A new approach to studying decision making in discrimination tasks is described that does not depend on the technical assumptions of signal detection theory (e.g., normality of the encoding distributions). In 3 different experiments, results of these new distribution-free tests converge on a single, surprising conclusion: response biases had substantial effects on the encoding distributions but no effect on the decision rule, which was uniformly unbiased in equal and unequal base rate conditions and in symmetric and asymmetric payoff conditions. This seemingly paradoxical result is fundamentally inconsistent with the entire family of signal detection theory models, raising some important questions about the significance of many published results in the human performance literature.     

Sampling assumptions in inductive generalization

Inductive generalization, where people go beyond the data provided, is a basic cognitive capability, and it underpins theoretical accounts of learning, categorization, and decision making. To complete the inductive leap needed for generalization, people must make a key 'sampling' assumption about how the available data were generated. Previous models have considered two extreme possibilities, known as strong and weak sampling. In strong sampling, data are assumed to have been deliberately generated as positive examples of a concept, whereas in weak sampling, data are assumed to have been generated without any restrictions. We develop a more general account of sampling that allows for an intermediate mixture of these two extremes, and we test its usefulness. In two experiments, we show that most people complete simple one-dimensional generalization tasks in a way that is consistent with their believing in some mixture of strong and weak sampling, but that there are large individual differences in the relative emphasis different people give to each type of sampling. We also show experimentally that the relative emphasis of the mixture is influenced by the structure of the available information. We discuss the psychological meaning of mixing strong and weak sampling, and possible extensions of our modeling approach to richer problems of inductive generalization.     

Information about foregone rewards impedes dynamic decision-making in older adults

“Making an informed decision” implies that more information leads to better decisions, yet it may be the case that additional information biases decisions in a systematic and sometimes detrimental manner. In the present study, we examined the effect of additional information on older adults’ decision-making using a task for which available rewards were dependent on the participant’s recent pattern of choices. The optimal strategy was to forego the immediately rewarding option in favor of the option that yielded larger delayed reward. We found that providing information about true foregone rewards – the reward that would have been received had the participant chosen the other option – significantly reduced older adults’ decision-making performance. However, false foregone rewards – foregone rewards manufactured to make the long-term option appear more immediately rewarding – led older adults to perform at a level equal to younger adults. We conclude that providing information about foregone rewards biases older adults toward immediate rewards at a greater rate than younger adults, leading to poorer older adult performance when immediate rewards and long-term rewards conflict, but intact performance when immediate rewards and long-term rewards appear to align.     

Testable conditions for triads of paired comparison choices

Forty-two choice models, each representing stimuli by one-dimensional probability distributions, are obtained by relaxing the assumptions of Thurstone's Case V Law of Comparative Judgment. The models which imply or fail to imply each of nine testable probabilistic conditions are determined. Stochastic transitivity is vulnerable in most of these models. The results suggest discarding weak stochastic transitivity, and in its place using the conjunction of weak stochastic transitivity and the triangular condition. However, unless it is possible to predict which stimuli will produce violations of the conditions, none of the conditions can be rejected on the basis of too frequent intransitive triads of choices.I am grateful to the referees, and to J. H. Griesmer and C. H. Coombs for a number of helpful criticisms and comments. J. H. Griesmer suggested a proof of Theorem 9, and a referee suggested a more direct proof of Theorem 5. A proof of Theorem 5 and the result concerning a maximally intransitive judge were given in [18].     

A re‐examination of melioration and rational choice

We examined how people allocate choices between two alternatives when the payoff from each alternative varied as a function of the allocation of recent choices. On any one trial alternative A had a higher immediate payoff than alternative B, but across all trials B had a higher overall payoff than A. Rational choice theory requires that participants allocate all their responses to the alternative with the greatest overall payoff irrespective of which has the higher immediate payoff. Melioration, in contrast, proposes that participants are motivated to choose the alternative with the higher immediate payoff, irrespective of the consequences for future returns. We report four experiments in which we varied the nature of the payoffs. Participants exhibited self‐control consistent with rational choice theory when payoffs varied in magnitude, but exhibited impulsiveness consistent with melioration when the payoffs varied in probability. Finally, we show that impulsivity when payoffs varied in probability can be overcome following un‐reinforced practice. Copyright © 2002 John Wiley & Sons, Ltd.     

How Affect Shapes Risky Choice: Distorted Probability Weighting Versus Probability Neglect

People's choices between prospects with relatively affect‐rich outcomes (e.g., medical side effects) can diverge markedly from their choices between prospects with relatively affect‐poor outcomes (e.g., monetary losses). We investigate the cognitive mechanisms underlying this “affect gap” in risky choice. One possibility is that affect‐rich prospects give rise to more distortion in probability weighting. Another is that they lead to the neglect of probabilities. To pit these two possibilities against each other, we fitted cumulative prospect theory (CPT) to the choices of individual participants, separately for choices between options with affect‐rich outcomes (adverse medical side effects) and options with affect‐poor outcomes (monetary losses); additionally, we tested a simple model of probability neglect, the minimax rule. The results indicated a qualitative difference in cognitive mechanisms between the affect‐rich and affect‐poor problems. Specifically, in affect‐poor problems, the large majority of participants were best described by CPT; in affect‐rich problems, the proportion of participants best described by the minimax rule was substantially higher. The affect gap persisted even when affect‐rich outcomes were supplemented by numerical information, thus providing no support for the thesis that choices in affect‐rich and affect‐poor problems diverge because the information provided in the former is nonnumerical. Our findings suggest that the traditional expectation‐based framework for modeling risky decision making may not readily generalize to affect‐rich choices. Copyright © 2015 John Wiley & Sons, Ltd.     

Some effects on generalization gradients of tandem schedules

The relationship between training conditions and stimulus generalization gradients was examined using tandem schedules of reinforcement. Schedules were selected so that frequency of reinforcement and rate of responding were varied somewhat independently of each other. A peak-shift in the generalization gradient was obtained when extinction had been associated with one of the stimuli. No comparable peak shift was obtained when there were equal response rates in the training stimuli even with dissimilar frequencies of reinforcement. The data imply that response rates at the end of training, rather than reinforcement frequency per se, determine the characteristics of the generalization gradient.