We evaluate the consistency of different constructs affecting risk attitude in individuals’ decisions across different levels of risk. Specifically, we contrast views suggesting that risk attitude is a single primitive construct with those suggesting it consists of multiple latent components. Additionally, we evaluate such constructs as sensitivity to losses, diminishing sensitivity to increases in payoff, sensitivity to variance, and risk acceptance (the willingness to accept probable outcomes over certainty). In search of trait-like constructs, the paper reviews experimental results focusing on (...) the consistency of these constructs in different tasks as well as their temporal consistency. Overall, the findings show that the most consistent factor is risk acceptance, and they also demonstrate its potential boundaries. These results are modeled with a simple quantitative index of subjective risk. A survey of decisions under risk further reveals that participants exhibit almost no consistency across different tasks in this setting, highlighting the advantage of experiential tasks for studying individual differences. (shrink)

Prior research in judgment and decision making (JDM) has investigated the effect of problem framing on human preferences. Furthermore, research in JDM documented the absence of such reversal of preferences when making decisions from experience. However, little is known about the effect of context on preferences under the combined influence of problem framing and problem format. Also, little is known about how cognitive models would account for human choices in different problem frames and types (general/specific) in the experience format. One (...) of the primary objectives of this research is to investigate the presence of preference reversals under the influence of problem framing (gain/loss), problem format (experience/description), and problem type (general/specific). Another objective of this research is to develop cognitive models to account for human choices across different problem frames and types in the experience format. A total of 320 participants from India were randomly assigned to one of eight between-subjects conditions that differed in problem frame, format, and type. Results revealed preference reversals in the description condition; however, they were absent in the experience condition. Moreover, preference reversals were less pronounced in the general problem framing compared to the specific problem framing. Furthermore, specific problems influenced risk-seeking behavior among participants. We developed cognitive and heuristics models using instance-based learning theory and natural mean heuristic. Results reveal models’ dependency on recent and frequent observations during information sampling. These experience-based cognitive models could help build artificial intelligence models with fewer preference reversals. (shrink)

We argue that approaches adhering to normative systems can be as fruitful as those by descriptive systems. In measuring people's perception of randomness, discrepancies between human behavior and normative models could have resulted from unknown properties of the models, and it does not necessarily lead to the conclusion that people are irrational or that the normative system has to be abandoned.

Most investigations into how people make risky choices have employed a simple drosophila: monetary gambles involving stated outcomes and probabilities. People are asked to make decisions from description . When people decide whether to back up their computer hard drive, cross a busy street, or go out on a date, however, they do not enjoy the convenience of stated outcomes and probabilities. People make such decisions either in the void of ignorance or in the twilight of their own often limited (...) experience of such real-world options. In the latter case, they make decisions from experience . Recent research has consistently documented that decisions from description and decisions from experience can lead to substantially different choices. Key in this description–experience gap is people’s treatment of rare events. In this paper, I briefly review studies that have documented the description–experience gap, offer several explanations for this gap, and discuss to what extent people’s decisions from experience are in conflict with benchmarks of rationality. (shrink)

Ng :255–285, 1995. https://doi.org/10.1007/bf00852469) models the evolutionary dynamics underlying the existence of suffering and enjoyment and concludes that there is likely to be more suffering than enjoyment in nature. In this paper, we find an error in Ng’s model that, when fixed, negates the original conclusion. Instead, the model offers only ambiguity as to whether suffering or enjoyment predominates in nature. We illustrate the dynamics around suffering and enjoyment with the most plausible parameters. In our illustration, we find surprising results: (...) the rate of failure to reproduce can improve or worsen average welfare depending on other characteristics of a species. Our illustration suggests that for organisms with more intense conscious experiences, the balance of enjoyment and suffering may lean more toward suffering. We offer some suggestions for empirical study of wild animal welfare. We conclude by noting that recent writings on wild animal welfare should be revised based on this correction to have a somewhat less pessimistic view of nature. (shrink)

Our understanding of the decisions made under scenarios where both descriptive and experience-based information are available is very limited. Underweighting of small probabilities was observed in the gain domain when both description and experience were provided. The divergence observed from the prospect theory suggests a need for a separate or modified theory of decision making under risk. Recent studies suggest a possible role of probability weighting in the choice behaviour under risk. We investigated both gain and loss domains with and (...) without feedback for small and large probability conditions. We characterized the shape of the probability weighting function by a two-parameter functional form representing discriminability (concave-convex shape) and attractiveness (level of absolute weights relative to objective probability). We replicated four-fold pattern of risk attitude on non-WEIRD population. We find that feedback leads to underweighting of small probabilities and overweighting of large probabilities in the gain domain and overall underweighting of probabilities in the loss domain. We find that underweighting of small probabilities is driven by changes in discriminability and attractiveness components in the gain domain and changes in the attractiveness component in the loss domain. We have interpreted the results by proposing an updated belief-based account of decisions under uncertainty in which feedback, when available, influences the probability weighting mediating the choice behaviour. (shrink)

Normative theories can be useful in developing descriptive theories, as when normative subjective expected utility theory is used to develop descriptive rational choice theory and behavioral game theory. “Ought” questions are also the essence of theories of moral reasoning, a domain of higher mental processing that could not survive without normative considerations.

Adolescence is a period of life during which peers play a pivotal role in decision-making. The narrative of social influence during adolescence often revolves around risky and maladaptive decisions, like driving under the influence, and using illegal substances. However, research has also shown that social influence can lead to increased prosocial behaviors and a reduction in risk-taking. While many studies support the notion that adolescents are more sensitive to peer influence than children or adults, the developmental processes that underlie this (...) sensitivity remain poorly understood. We argue that one important reason for this lack of understanding is the absence of precisely formulated models. To make a first step toward formal models of social influence during adolescence, we first identify three prominent verbal models of social influence in the literature: social motivation, reward sensitivity, and distraction. We then illustrate how these can be translated into formal models, and how such formal models can inform experimental design and help identify developmental processes. Finally, by applying our formal models to existing datasets, we demonstrate the usefulness of formalization by synthesizing different studies with seemingly disparate results. We conclude with a discussion on how formal modeling can be utilized to better investigate the development of peer influence in adolescence. (shrink)