Showing papers in "Journal of Behavioral Decision Making in 2019"

Making Sense of Recommendations

Abstract: Algorithms are increasingly being used to make recommendations about matters of taste, expanding their scope into domains that are primarily subjective. This raises two important questions. How accurately can algorithms predict subjective preferences, compared to human recommenders? And how much do people trust them? Recommender systems face several disadvantages: They have no preferences of their own and they do not model their recommendations after the way people make recommendations. In a series of experiments, however, we find that recommender systems outperform human recommenders, even in a domain where people have a lot of experience and well-developed tastes: Predicting what people will find funny. Moreover, these recommender systems outperform friends, family members, and significant others. But people do not trust these recommender systems. They do not use them to make recommendations for others, and they prefer to receive recommendations from other people instead. We find that this lack of trust partly stems from the fact that machine recommendations seem harder to understand than human recommendations. But, simple explanations of recommender systems can alleviate this distrust.

Age differences in financial decision making: The benefits of more experience and less negative emotions

Abstract: The emerging literature on aging and decision making posits that decision‐making competence changes with age, as a result of age differences in various cognitive and noncognitive individual‐differences characteristics. In a national life‐span sample from the United Kingdom (N = 926), we examined age differences in financial decisions, including performance measures of sunk cost and credit card repayment decisions, and self‐report measures of money management and financial decision outcomes. Participants also completed four individual‐differences characteristics that have been proposed as relevant to financial decision making, including two cognitive ones (numeracy and experience‐based knowledge) and two noncognitive ones (negative emotions about financial decisions). First, we examined how age was related to the four financial decision‐making measures and the four individual‐differences characteristics. Older age was correlated to better scores on each of the four financial decision‐making measures, more experience‐based knowledge, less negative emotions about financial decisions, whereas numeracy and motivation were not significantly correlated with age. Second, we found that considering both the two cognitive and the two noncognitive individual‐differences characteristics increased predictions of financial decision making, as compared with considering either alone. Third, we examined how these four individual‐differences characteristics contributed to age differences in financial decision making. Older adults' higher levels of experience‐based knowledge and lower levels of negative emotions seemed to especially benefit their financial decision making. We discuss implications for theories on aging and decision making, as well as for interventions targeting financial decisions.

Age differences in moral judgment: Older adults are more deontological than younger adults

Abstract: In 2 studies, an older and a younger age group morally evaluated dilemmas contrasting a deontological judgment (do not harm others) against a utilitarian judgment (do what is best for the majority). Previous research suggests that deontological moral judgments are often underpinned by affective reactions and utilitarian moral judgments by deliberative thinking. Separately, research on the psychology of aging has shown that affect plays a more prominent role in the judgments and decision making of older (vs. younger) adults. Yet age remains a largely overlooked factor in moral judgment research. Here, we therefore investigated whether older adults would make more deontological judgments on the basis of experiencing different affective reactions to moral dilemmas as compared with younger adults. Results from 2 experiments indicated that older adults made significantly more deontological moral judgments. Mediation analyses revealed that the relationship between age and making more deontological moral judgments is partly explained by older adults exhibiting significantly more negative affective reactions and having more morally idealistic beliefs as compared with younger adults.

Nudges and signposts: The effect of smart defaults and pictographic risk information on retirement saving investment choices

Abstract: The authors tested two interventions to improve retirement savings investment decisions. In an incentive-compatible experiment, 459 participants engaged in a task simulating their working life. Periodically during the simulation, participants chose between different investment options. The authors examined the effectiveness of a "nudge" by manipulating the default option and the effectiveness of a "signpost" by manipulating the display of a pictograph summarizing the expected return of each option. Participants often followed the default option, particularly when it was "smart" (i.e., became more conservative as retirement approached) and when presented together with dynamic pictographs (i.e., updated each year assuming the investment was held until retirement). Those most likely to make optimal choices (i.e., consistent with the life cycle model) were presented with a smart default or dynamic pictographs. These findings reveal how different choice architecture interventions can be used to positively influence behavior. Retirement funds and regulators can support retirement savings decisions by the provision of smart defaults and better risk information in the form of pictographs.

Do process simulations during episodic future thinking enhance the reduction of delay discounting for middle income participants and those living in poverty

Abstract: Two studies examined whether episodic future thinking (EFT; pre-experiencing future events) reduces discounting of future rewards (DD). No studies have investigated whether process simulations (i.e., simulating the process of executing a future event) amplify EFT's reduction of DD. Study 1 examined the effect of incorporating process simulations into EFT (N = 42, Mage = 43.27; 91% female, family income = $75,976) using a 2 × 2 factorial design with type of episodic thinking (process, nonprocess/general) and temporal perspective (EFT, episodic recent thinking) as between-subjects factors. Study 2 replicated Study 1 in a sample of adults living in poverty (N = 36; Mage = 38.44, 88% female; family income = $25,625). The results of both studies showed EFT reduced DD, but process-oriented EFT did not amplify the effect of EFT. Our findings suggest the key ingredient in EFT's effect on DD is self-projection into the future. This was also the first study to show EFT improves DD in a sample living in poverty.

Forward inference in risky choice: Mapping gaze and decision processes

Abstract: The study of cognitive processes is built on a close mapping between three components: overt gaze behavior, overt choice, and covert processes. To validate this overt–covert mapping in the domain of decision‐making, we collected eye‐movement data during decisions between risky gamble problems. Applying a forward inference paradigm, participants were instructed to use specific decision strategies to solve those gamble problems (maximizing expected values or applying different choice heuristics) during which gaze behavior was recorded. We revealed differences between overt behavior, as indicated by eye movements, and covert decision processes, instructed by the experimenter. However, our results show that the overt–covert mapping is for some eye‐movement measures not as close as expected by current decision theory, and hence question reverse inference as being prone to fallacies due to a violation of its prerequisite, that is, a close overt–covert mapping. We propose a framework to rehabilitate reverse inference.

The loss-bet paradox: Actuaries, accountants, and other numerate people rate numerically inferior gambles as superior

Abstract: Psychologists have convincingly demonstrated that preferences are not always stable and, instead, are often "constructed" based on information available in the judgment or decision context. In 4 studies with experts (accountants and actuaries in Studies 1 and 2, respectively) and a diverse lay population (Studies 3 and 4), the evidence was consistent with the highly numerate being more likely than the less numerate to construct their preferences by rating a numerically inferior bet as superior (i.e., the bets effect). Thus, the effect generalizes beyond a college student sample, and preference construction differs by numeracy. Contrary to prior thinking about preference construction, however, high expertise and high ability (rather than low) consistently related to the paradoxical phenomenon. Results across studies including Study 3's experimental modifications of the task supported the hypothesized number comparison process (and not a lack of expertise with monetary outcomes and probabilities or numeracy-related differences in attention to numbers) as the effect's underlying cause. The bets effect was not attenuated by Study 4's instructions to think about what would be purchased with bet winnings. Task results combined with free-response coding supported the notion that highly numerate participants have a systematic and persistent inclination for doing simple and complex number operations that drive their judgments (even after controlling for nonnumeric intelligence). Implications for 3 types of dual-process theories are discussed. The results were inconsistent with default-interventionist theories, consistent or unclear with respect to fuzzy trace theory, and consistent with interactive theories.

Much ado about nothing: The zero effect in life-saving decisions

Abstract: Zero is a special value in our daily lives, and previous research on how zero values affect decision making leaves many questions to be explored. The present research examined the zero effect in life-saving decisions and found that people expressed strong preferences for options offering a possibility that no one will die, even when the expected loss was relatively high. The prominence effect was proposed as one possible explanation, i.e., the notion that the option with possibly zero deaths is easy to defend and justify. Furthermore, we also found the zero effect in these life-saving decisions occurs only in loss framing rather than gain framing. We discuss the relationship between the zero effect, domain, framing, and evaluation mode.

Is greed contagious? Four experimental studies

Abstract: J Behav Dec Making. 2019;32:579–598. Abstract Do people become greedier when interacting with others they perceive to be greedy? It has been speculated that greed contagion exits and may have influenced the 2008 financial collapse. We examined this possibility in four experimental studies using a common pool resource dilemma. Specifically, whether participants' second‐round (R2) withdrawal from the common pool was influenced (a) by their assessment of how greedy their opponents' first‐round (R1) withdrawal was, (b) by R1 opponents' reputation for being greedy, (c) by observing past behavior of others in unrelated interactions, and (d) when R1 opponents directly confronted them with an assessment of their own greediness of their R1 withdrawal. In addition, Study 2 examined R2 interactions involving new opponents. Taken together, results suggest that there is contagion of greed. However, the connection appears to be driven by participants adjusting to their opponent's actual behavior, not by their evaluation of the greediness of such behavior. It seems that perceptions of greed do not mediate future behavior and, thus, are not necessarily contagious, but norms of selfish behavior are. In this sense, greed perceptions appear to by epiphenomenal in that they are an incidental by‐product of the behavioral interaction. We discuss the implications of these findings and suggest directions for further research.

Contrast effects in judgmental forecasting when assessing the implications of worst- and best-case scenarios

Abstract: Two experiments investigated whether individuals’ forecasts of the demand for products and a stock market index assuming a best or worst-case scenario depend on whether they have seen a single scenario in isolation or whether they have also seen a second scenario presenting an opposing view of the future. Normatively, scenarios should be regarded as belonging to different plausible future worlds so that the judged implications of one scenario should not be affected when other scenarios are available. However, the results provided evidence of contrast effects in that the presentation of a second ‘opposite’ scenario led to more extreme forecasts consistent with the polarity of the original scenario. In addition, people were more confident about their forecasts based on a given scenario when two opposing scenarios were available. We examine the implications of our findings for the elicitation of point forecasts and judgmental prediction intervals and the biases that are often associated with them.

Decision making in the prisoner's dilemma game: The effect of exit on cooperation and social welfare

Abstract: The prisoner's dilemma game is a mixed-motive game that offers two players the simultaneous choice between a cooperative and a defective alternative. An often neglected aspect of such a binary-choice game, however, is that in many real-life encounters, people can choose not only to cooperate or defect, but they also have a third option: to exit the social dilemma. Although in the literature a consensus has emerged that the addition of an exit opportunity benefits cooperation, there is only scant research into its effect on social welfare. In order to allow a direct comparison of cooperation rates and welfare levels across binary-choice and trinary-choice games, in this study, we used a design in which the same participants played similar games with and without an exit option (i.e., a within-subjects design), and this in a range of structural variations. The findings of our study indicated that the aggregated outcome of both players is generally lower in games with an exit option than in games without an exit option. Moreover, our results showed that the efficiency of the exit option strongly depends on the specific outcome structure of the game (in terms of its endowment size, (a)symmetry, and level of noncorrespondence). In the discussion, it is argued that the implementation of an exit option as a strategy to increase social welfare should be critically assessed.

The effect of decision timing on the willingness to costly reward cooperation and punish noncooperation: Sanctioning the past, the present, or the future

Abstract: Numerous studies have demonstrated that sanctions can promote cooperation. However, it is important to know not only that sanctions can work but also under what conditions people are actually willing to sanction cooperation positively (i.e., reward) or noncooperation negatively (i.e., punish). In this article, we demonstrate that people use sanctions less often and sanction more mildly when they decide about sanctioning before (instead of after) the occurrence of others' (non)cooperation (Experiments 1 and 2), regardless of whether they decide directly afterwards or after a time delay (Experiment 2). Moreover, we reveal that beforehand (as compared with afterwards) people have not yet formed clear sanctioning preferences (Experiment 3). These findings corroborate our reasoning that the decision environment beforehand induces nonconsequential reasoning and thereby hampers people's willingness to sanction. We discuss the theoretical, methodological, and practical implications of our work.

Framing experts' (dis)agreements about uncertain environmental events

Abstract: Tilgjengelig fra 07.11.2021 pa grunn av embargo fra utgiver/ Available from 07.11.2021 because of embargo from publisher

Extreme malleability of preferences: Absolute preference sign changes under uncertainty

Abstract: J Behav Dec Making. 2018;1–9. Abstract Malleability of preferences is a central tenet of behavioral decision theory. How malleable preferences really are, however, is a topic of debate. Do preference reversals imply preference construction? We argue that to claim preferences are construed, a demonstration of more extreme preference malleability than simple preference reversals is required: absolute preference sign changes within participants. If respondents value a prospect positively in 1 condition but negatively in a different condition, preferences cannot be considered stable. Such absolute preference sign changes are possible under uncertainty. In 2 incentive‐compatible experiments, we found participants were willing to pay to take part in a gamble and also demanded to be compensated to take part in a subsequent gamble with identical outcomes and probabilities. Such absolute preference sign changes within participants led to simultaneous risk aversion and risk seeking for the same risky prospect, suggesting that, at least in the domain of risky decisions, consumers' preferences are indeed malleable and construed.

Motivated to confront: How experiencing anger affects anchoring bias

Abstract: J Behav Dec Making. 2019;1–11. Abstract Prior research has asserted that emotions affect anchoring bias in decision making through the emotion's certainty appraisal or through the emotion's action tendencies, but these prior studies investigate the role of each component—appraisal or action tendency—without accounting for potential effects of the other one. The current research investigates whether anger exerts a significant effect on anchoring bias by activating a desire to confront a potential anchor. Importantly, the studies compare the effect of anger versus disgust, emotions that differ in their action tendency but are similar in their certainty appraisal. In Study 1, participants completed an emotion induction task and then a negotiation task where the first offer from the negotiation partner served as a potential anchor. Anger led to more deviation from the anchor compared with disgust or neutral feelings. Subsequent studies provide evidence that the angry participants are less anchored when the anchor value comes from a more confrontable source (someone else vs. themselves in Study 2 and an out‐group member vs. an in‐group member in Study 3).

Too good to be true? Psychological responses to uncommon options in risk–reward environments

Abstract: Correspondence Christina Leuker, Center for Adaptive Rationality, Max Planck Institute for Human Development, Berlin, Germany. Email: leuker@mpib-berlin.mpg.de Risks and rewards, or payoffs and probabilities, are inversely related in many choice environments. We investigated people's psychological responses to uncommon combinations of risk and reward that deviate from learned regularities (e.g., options that offer a high payoff with an unusually high probability) as they evaluated risky options. In two experiments (N = 183), participants first priced monetary gambles drawn from environments in which risks and rewards were negatively correlated, positively correlated, or uncorrelated. In later trials, they evaluated gambles with uncommon combinations of risk and reward—that is, options that deviated from the respective environment's risk–reward structure. Pricing, response times, and (in Experiment 2) pupil dilation were recorded. In both experiments, participants took more time when responding to uncommon compared to foreseeable options or when the same options were presented in an uncorrelated risk–reward environment. This result was most pronounced when the uncommon gambles offered higher expected values compared to the other gambles in the set. Moreover, these uncommon, high-value options were associated with an increase in pupil size. These results suggest that people's evaluations of risky options are based not only on the options' payoffs and probabilities but also on the extent to which they fit the risk–reward structure of the environment.

Examining the trade-off between confidence and optimism in future forecasts

Abstract: Confident business forecasters are seen as more credible and competent (“confidence heuristic”). We explored a boundary condition of this effect by examining how individuals react to the trade‐off between confidence and optimism. Using hypothetical scenarios, we examined this trade‐off from the perspectives of judges (i.e., business owners who hired analysts to make sales predictions) and forecasters (i.e., the analysts hired to make predictions). Participants were assigned to the role of either judges or forecasters and were asked to rate 2 potential forecasts. In the “no trade‐off” condition, the 2 forecasts were aligned in optimism and confidence (the more confident forecast was also more optimistic); in the “trade‐off” condition, the more confident forecast was less optimistic. In Experiment 1, judges were more likely to positively evaluate confident forecasters when confident forecasters were the more (vs. less) optimistic ones. Experiment 2 demonstrated that forecasters were aware of judges' preferences for optimism and strategically relied on methods that resulted in more optimistic (but less reliable) predictions. Experiment 3 directly compared the perspectives of judges and forecasters, revealing that forecasters overestimated judges' preferences for optimism over confidence. The present studies show that forecasters and judges have different views of the trade‐off between confidence and optimism and that forecasters may unnecessarily sacrifice accuracy for optimism. KEYWORDS: advice giving, confidence heuristic, forecasts, optimism, warmth, morality, and competence