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Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events?

Ludvig EA, Spetch ML - PLoS ONE (2011)

Bottom Line: Specifically, rare outcomes are overweighted when described and underweighted when experienced.For experience-based decisions, there was a reversal of the reflection effect with greater risk seeking for gains than for losses, as compared to description-based decisions.This fundamental difference in experienced and described choices cannot be explained by the weighting of rare events and suggests a separate subjective utility curve for experience.

View Article: PubMed Central - PubMed

Affiliation: Princeton Neuroscience Institute, Princeton University, Princeton, New Jersey, United States of America. eludvig@princeton.edu

ABSTRACT
When faced with risky decisions, people tend to be risk averse for gains and risk seeking for losses (the reflection effect). Studies examining this risk-sensitive decision making, however, typically ask people directly what they would do in hypothetical choice scenarios. A recent flurry of studies has shown that when these risky decisions include rare outcomes, people make different choices for explicitly described probabilities than for experienced probabilistic outcomes. Specifically, rare outcomes are overweighted when described and underweighted when experienced. In two experiments, we examined risk-sensitive decision making when the risky option had two equally probable (50%) outcomes. For experience-based decisions, there was a reversal of the reflection effect with greater risk seeking for gains than for losses, as compared to description-based decisions. This fundamental difference in experienced and described choices cannot be explained by the weighting of rare events and suggests a separate subjective utility curve for experience.

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Results from Experiment 2.(A). Reflection scores as a function of experimental condition.                            Participants displayed reliably higher reflection scores for described                            vs. experienced problems (p<.001). (B). Reflection                            scores on experienced and described trials as a function of block in the                            experiment. On each block, reflection scores were higher for described                            than for experienced trials. PT  =  pre-training                            for the experienced trials, where feedback was obtained after each                            trial. (C). Gambling quotient as a function of experimental condition                            and choice type. For gains, participants were risk seeking for                            experienced problems, but risk averse for described problems. In                            contrast, for losses, participants were risk averse in experienced                            problems, but nominally risk seeking in described problems. *                             =  p<.05. (D). Percentage                            correct on catch trials as a function of experience training block.                            Performance was relatively stable across test blocks, peaking at                            100% on test block 5.
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pone-0020262-g003: Results from Experiment 2.(A). Reflection scores as a function of experimental condition. Participants displayed reliably higher reflection scores for described vs. experienced problems (p<.001). (B). Reflection scores on experienced and described trials as a function of block in the experiment. On each block, reflection scores were higher for described than for experienced trials. PT  =  pre-training for the experienced trials, where feedback was obtained after each trial. (C). Gambling quotient as a function of experimental condition and choice type. For gains, participants were risk seeking for experienced problems, but risk averse for described problems. In contrast, for losses, participants were risk averse in experienced problems, but nominally risk seeking in described problems. *  =  p<.05. (D). Percentage correct on catch trials as a function of experience training block. Performance was relatively stable across test blocks, peaking at 100% on test block 5.

Mentions: As in Experiment 1, people again gambled more for gains than losses when these contingencies were learned from experience, but not when they were described, even when immediate feedback was no longer being provided about the experience-based choices. Figure 3A depicts how the reflection scores were significantly lower in the experienced trials, (t(26)  = 2.79, p<.01, d = .54). These reflection scores were consistent across the 6 non-feedback runs for both experienced and described trials, as shown in Figure 3B. A two-way ANOVA confirmed a main effect of trial type (F(1,27)  = 7.83; p<.01, η2p = .23), but no effect of run, nor any interaction (both ps>.25). The difference between experienced and described trials was present for both gains and losses. As depicted in Figure 3C, when choosing between gains, participants gambled more in the experienced case, and when choosing between losses, participants gambled more in the described case (condition × choice type interaction, F(1,26)  = 7.82; p = .01, η2p = .23; both pairwise comparisons, p<.038). In addition, there was a significant reversal of the reflection effect for the experienced trials (p<.01); however, the reflection effect for the described condition failed to reach significance (p>.05). Finally, performance on the catch trials was high throughout, even peaking at 100% correct on the 5th run (see Fig. 3D).


Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events?

Ludvig EA, Spetch ML - PLoS ONE (2011)

Results from Experiment 2.(A). Reflection scores as a function of experimental condition.                            Participants displayed reliably higher reflection scores for described                            vs. experienced problems (p<.001). (B). Reflection                            scores on experienced and described trials as a function of block in the                            experiment. On each block, reflection scores were higher for described                            than for experienced trials. PT  =  pre-training                            for the experienced trials, where feedback was obtained after each                            trial. (C). Gambling quotient as a function of experimental condition                            and choice type. For gains, participants were risk seeking for                            experienced problems, but risk averse for described problems. In                            contrast, for losses, participants were risk averse in experienced                            problems, but nominally risk seeking in described problems. *                             =  p<.05. (D). Percentage                            correct on catch trials as a function of experience training block.                            Performance was relatively stable across test blocks, peaking at                            100% on test block 5.
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Related In: Results  -  Collection

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getmorefigures.php?uid=PMC3105996&req=5

pone-0020262-g003: Results from Experiment 2.(A). Reflection scores as a function of experimental condition. Participants displayed reliably higher reflection scores for described vs. experienced problems (p<.001). (B). Reflection scores on experienced and described trials as a function of block in the experiment. On each block, reflection scores were higher for described than for experienced trials. PT  =  pre-training for the experienced trials, where feedback was obtained after each trial. (C). Gambling quotient as a function of experimental condition and choice type. For gains, participants were risk seeking for experienced problems, but risk averse for described problems. In contrast, for losses, participants were risk averse in experienced problems, but nominally risk seeking in described problems. *  =  p<.05. (D). Percentage correct on catch trials as a function of experience training block. Performance was relatively stable across test blocks, peaking at 100% on test block 5.
Mentions: As in Experiment 1, people again gambled more for gains than losses when these contingencies were learned from experience, but not when they were described, even when immediate feedback was no longer being provided about the experience-based choices. Figure 3A depicts how the reflection scores were significantly lower in the experienced trials, (t(26)  = 2.79, p<.01, d = .54). These reflection scores were consistent across the 6 non-feedback runs for both experienced and described trials, as shown in Figure 3B. A two-way ANOVA confirmed a main effect of trial type (F(1,27)  = 7.83; p<.01, η2p = .23), but no effect of run, nor any interaction (both ps>.25). The difference between experienced and described trials was present for both gains and losses. As depicted in Figure 3C, when choosing between gains, participants gambled more in the experienced case, and when choosing between losses, participants gambled more in the described case (condition × choice type interaction, F(1,26)  = 7.82; p = .01, η2p = .23; both pairwise comparisons, p<.038). In addition, there was a significant reversal of the reflection effect for the experienced trials (p<.01); however, the reflection effect for the described condition failed to reach significance (p>.05). Finally, performance on the catch trials was high throughout, even peaking at 100% correct on the 5th run (see Fig. 3D).

Bottom Line: Specifically, rare outcomes are overweighted when described and underweighted when experienced.For experience-based decisions, there was a reversal of the reflection effect with greater risk seeking for gains than for losses, as compared to description-based decisions.This fundamental difference in experienced and described choices cannot be explained by the weighting of rare events and suggests a separate subjective utility curve for experience.

View Article: PubMed Central - PubMed

Affiliation: Princeton Neuroscience Institute, Princeton University, Princeton, New Jersey, United States of America. eludvig@princeton.edu

ABSTRACT
When faced with risky decisions, people tend to be risk averse for gains and risk seeking for losses (the reflection effect). Studies examining this risk-sensitive decision making, however, typically ask people directly what they would do in hypothetical choice scenarios. A recent flurry of studies has shown that when these risky decisions include rare outcomes, people make different choices for explicitly described probabilities than for experienced probabilistic outcomes. Specifically, rare outcomes are overweighted when described and underweighted when experienced. In two experiments, we examined risk-sensitive decision making when the risky option had two equally probable (50%) outcomes. For experience-based decisions, there was a reversal of the reflection effect with greater risk seeking for gains than for losses, as compared to description-based decisions. This fundamental difference in experienced and described choices cannot be explained by the weighting of rare events and suggests a separate subjective utility curve for experience.

Show MeSH
Related in: MedlinePlus