Huber Huber Bär 2011 Adv first (original) (raw)
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Behavior in risky decisions: Focus on risk defusing
In experiments on risky decisions with gambles as alternatives the central factors determining decision behaviour are: The subjective values of the outcomes, and their subjective probability. The present paper first reports results of a number of experiments indicating that this central result cannot be generalized. In quasi-realistic risky scenarios, many decision makers are not interested in probability information and many search actively for risk-defusing operators (RDOs). An RDO is an action intended by the decision maker to be performed additionally to a specific alternative in order to decrease the risk. The paper also gives an overview about experimental research with RDOs. Topics include the factors that determine the search for RDOs and the factors affecting the acceptance of an RDO. Finding an acceptable RDO has a distinct effect on choice: If for a specific risky alternative an RDO is available, this alternative is chosen most often. The consequences of the concept of RDOs on theories about decision behaviour and on aiding decision making are discussed.
Journal of Behavioral Decision Making, 2011
In three experiments the problem is investigated how people identify early in the decision process those alternatives that are worthwhile to be examined in more detail. We assume that decision makers employ the Advantages first Principle: They first search for information about positive outcomes and then focus their information search (e.g., for negative consequences or for risk defusing operators) on those alternatives that appear attractive after this initial evaluation. In Experiment 1 (120 participants), initial information about consequences was varied for eight alternatives (no information, positive consequences, negative, or mixed for four alternatives). In all conditions, the great majority of participants followed both aspects of the Advantages first Principle. In Experiment 2, 60 participants decided in two quasi-realistic scenarios with two alternatives each. Initial information was presented so that one alternative had better positive consequences, worse negative consequences, or both. In all conditions, more information was searched for in the initially better alternative. In Experiment 3 (20 participants) the Advantages first Principle was not only confirmed for a scenario but also for choices in traditional gambling tasks with two and eight alternatives, respectively. Participants could win or lose real money. a summary of experimental results concerning factors influencing the search for RDOs and the factors affecting the acceptance of an RDO (e.g., costs of applying an RDO, size of its effect). Low interest in probabilities and search for RDOs were also found in a study investigating real decisions in the context of genetic counseling by . O. Huber and O. W. Huber (2008) directly compared information search in gambles and quasi-realistic scenarios. They obtained different search patterns, with those for gambles incorporating search for outcomes and probabilities, whereas in quasi-realistic scenarios participants predominantly searched for outcomes and RDOs. 2 Consider, for example, the situation of a businesswoman who is confronted with two options: She can travel into a country where an epidemic disease rages in order to negotiate an important contract, or she can postpone the meeting with the risk of failing to sign a satisfying contract . The businesswoman may inquire whether a vaccination exists or may look for possibilities to prevent an infection (e.g., by cooking water before drinking it). These additional actions are RDOs. RDOs are quite common in everyday risky decision situations. Typical examples are: If a person considers driving by car in a region where many cars are stolen, taking out car theft insurance is an RDO, or if a person considers sending important documents by mail and fears they could get lost, he or she can make a copy of the documents as an RDO. Different types of RDOs are distinguished in Note: The first number indicates the means across all eight alternatives. The number in parentheses displays means for those alternatives for which no information was presented initially. For example, if one participant in the no information condition in the maki scenario had started with search for negative consequences for two alternatives and for positive consequences for six alternatives, the respective numbers would be 0.25 for negative consequences, and 0.75 for positive consequences, respectively.
The Cognitive Processes Underlying Risky Choice
2013
In this article, we tested two concepts of decision making: expected utility theory and heuristic choice. In Experiment 1, we applied think-aloud protocols to investigate violations of expected utility theory. In Experiments 2 to 4, we introduced a new process-tracing method-called predictaloud protocols-that has advantages over previously suggested research methods. Results show the following: (i) people examine information between rather than within gambles; (ii) the priority heuristic emerges as the most frequently used strategy when problems are difficult; and (iii) people check for similarity when problems are easy.
Acta Psychologica, 2008
The paper investigates predecisional information search in risky decisions, specifically information concerning the probability of a negative outcome and whether a risk-defusing operator (RDO) is available. Experiment 1 (54 participants) tested the hypothesis that search for such information is triggered by expectations that it can be obtained in the situation. Cues for the availability of information were manipulated. It was predicted that cues mentioning possible information sources raise expectations and consequently increase search activity. Furthermore, gambles were expected to differ from other real world contexts, with lower expectations for RDOs and higher ones for probabilities. The Method of Active Information Search was employed. The number of questions asked about probability and RDOs in different conditions confirmed the hypotheses. Experiment 2 (36 participants) ruled out the alternative interpretation that the expectation to actually find favorable probabilities or applicable RDOs respectively, rather than the expectation to obtain information, determined information search.
How the twain can meet: Prospect theory and models of heuristics in risky choice
Cognitive Psychology, 2017
Two influential approaches to modeling choice between risky options are algebraic models (which focus on predicting the overt decisions) and models of heuristics (which are also concerned with capturing the underlying cognitive process). Because they rest on fundamentally different assumptions and algorithms, the two approaches are usually treated as antithetical, or even incommensurable. Drawing on cumulative prospect theory (CPT; Tversky & Kahneman, 1992) as the currently most influential instance of a descriptive algebraic model, we demonstrate how the two modeling traditions can be linked. CPT's algebraic functions characterize choices in terms of psychophysical (diminishing sensitivity to probabilities and outcomes) as well as psychological (risk aversion and loss aversion) constructs. Models of heuristics characterize choices as rooted in simple informationprocessing principles such as lexicographic and limited search. In computer simulations, we estimated CPT's parameters for choices produced by various heuristics. The resulting CPT parameter profiles portray each of the choice-generating heuristics in psychologically meaningful ways-capturing, for instance, differences in how the heuristics process probability information. Furthermore, CPT parameters can reflect a key property of many heuristics, lexicographic search, and track the environment-dependent behavior of heuristics. Finally, we show, both in an empirical and a model recovery study, how CPT parameter profiles can be used to detect the operation of heuristics. We also address the limits of CPT's ability to capture choices produced by heuristics. Our results highlight an untapped potential of CPT as a measurement tool to characterize the information processing underlying risky choice.
The Psychology of Risk: A Brief Primer
SSRN Electronic Journal, 1999
Risk is commonly defined in negative terms-the probability of suffering loss, or factors and actions involving uncertain dangers or hazards. In contrast, the definition used in the social sciences relies on simply the degree of uncertainty-how much variance exists among the possible outcomes associated with a particular choice or action. Counter to intuition, an investment that will lose 5forcertainwouldthereforebeclassifiedaslessriskythanonethathasanequalchanceofyieldingeitheragainof5 for certain would therefore be classified as less risky than one that has an equal chance of yielding either a gain of 5forcertainwouldthereforebeclassifiedaslessriskythanonethathasanequalchanceofyieldingeitheragainof10 or a gain of $15. Uncertainty and value are treated as separable entities because expanding the notion of risk to include gains as well as losses adds considerable conceptual power. For example, depending on how a pair of options is described, a choice can appear as if between two losses or between two gains. Consider the following: Problem I: Imagine that you are faced with a life or death choice. The U.S. has safely quarantined all 600 people infected with an unusual virus, but is now certain that they will all die without some treatment. Resources are severely limited and the choice mast be made between two scienttjk programs. Program A: If adopted, 2cO people will be saved for certain. Program B: If adopted, there is a IN probability that 600 people will be saved and a 2/3 probability that no people will be saved. People choose A over B by a ratio of three to one, showing a preference for the certain outcome. Now consider the same scenario with a different set of choices. Program C: if adopted, 400 people will die for certain. Program D: If adopted, there is a l/3 probability that no people will die and a 213 probability that 600 people will die. People choose D over C by a ratio of four to one, showing a preference for risk. However, note that the end results of A and C are exactly the same-200 people alive, 400 dead-as are those of B and D. According to classical theories of rationality, one cannot both prefer A to B and D to C. This paper will discuss why most people do. Economic theories based on "perfect" rationality are undoubtedly powerful. If one wanted to describe or predict human behavior in the simplest possible manner, one would certainly want to begin by assuming (1) that people are motivated by their own self interests, and (2) that they can be extremely calculating when valuable opportunities arise, learning quickly from the success of others. Research on the psychology of risk does not begin by assuming that all human behavior is irrational, random, or thoughtless. Rather this research has centered on how people may be biased by
Inducing alternative-based and characteristic-based search procedures in risky choice
Judgment and Decision Making, 2020
We propose a novel experimental design aimed at investigating whether inducing individuals to use certain choice procedures has an effect on the outcome of their decision. Specifically, by implementing a modification of the mouse-tracing method, we induce subjects to use either alternative-based or characteristic-based search procedures in a between-subject lottery-choice experiment. We find that encouraging subjects to search by characteristic systematically makes them choose riskier options. Consistently with existing literature, our evidence indicates that individuals typically look up information within alternatives. However, when induced to search by characteristic, high prizes receive more attention, leading individuals to switch to non-compensatory heuristics and -- consequently -- make riskier choices. Our findings are robust to variations in the complexity of the choice problem and individual differences in risk-attitudes, CRT scores, and gender.