Asymmetric Effects of Favorable and Unfavorable Information on Decision-making Under Ambiguity

Most daily decisions involve uncertainty about outcome probabilities arising from incomplete knowledge, i.e., ambiguity. We explore how the addition of partial information affects these types of choices using theoretical and empirical methods. Our experiments in both gain and loss domains demonstrate that when such information supports a favorable outcome, it strongly increases valuation of an ambiguous financial prospect. However, when information supports an unfavorable outcome, it has significantly less impact. We find that two mechanisms drive this asymmetry. First, unfavorable information decreases estimates of a good outcome occurring but also reduces aversive uncertainty. These factors act in opposition, minimizing the effects of unfavorable information. Second, when information can be subjectively interpreted, unfavorable information is less likely to be integrated into evaluations. Our findings reveal mechanisms not captured by traditional models of decision making under uncertainty and highlight the importance of increasing the salience of unfavorable information in uncertain contexts to promote unbiased decision making

BYOB: How Bringing Your Own Shopping Bags Leads to Treating Yourself, and the Environment

As concerns about pollution and climate change have become more central in public discourse, shopping with reusable grocery bags has been strongly promoted as environmentally and socially conscious. In parallel, firms have joined policy makers in using a variety of initiatives to reduce the use of plastic bags. However, little is known about how these initiatives might alter consumers' in-store behavior. Using scanner panel data from a single California location of a major grocery chain, and completely controlling for consumer heterogeneity, we demonstrate that bringing your own bags simultaneously increases purchases of environmentally friendly as well as indulgent (hedonic) items. We use experimental methods to further demonstrate causality and to consider the effects of potential moderators. These findings have implications for decisions related to product pricing, placement and assortment, store layout, and the choice of strategies to increase the use of reusable bags

Naps Do Not Change Delay Discounting Behavior in Young Adults

When offered a choice of $40 today or$50 later, many would choose the immediate reward over the greater delayed reward. Such behavior is a result of future gains being discounted such that their value is rendered less than that of the immediate gain. Extreme discounting behaviors are associated with impulsivity and addiction. Given recent evidence of sleep’s role in decision making, we tested the hypothesis that sleep would reduce delayed discounting behavior. Twenty young adults (M = 20.19 years, SD = 0.98 years; 6 males) performed a hypothetical delay discounting task, making a series of choices between an immediate reward (from $0 to$50) or a larger reward ($50) available at a delay of 2, 4, 8, 14, or 22 weeks. Participants performed the task before and after a mid-day nap, and before and after an equivalent interval of wake (within subject, order counterbalanced, wake, and sleep conditions separated by 1 week). As expected, indifference points decreased with longer delays both prior to and following the nap/wake interval. However, the impact of a nap interval on discounting did not differ from the impact of a wake interval. Thus, while sleep has been shown to play an active role in some financial decision-making tasks, a nap is not sufficient to change delay discounting behavior

Gender differences in optimistic information processing in uncertain decisions.

Decision-makers often are faced with uncertain situations in which they have incomplete information. While risky decisions include the probabilities of the possible outcomes, ambiguous decisions involve both unknown probabilities and unknown outcomes. Prior research has suggested that there are differences in how men and women evaluate risk, but evidence related to gender and ambiguity is mixed. The present work approaches this problem from a novel angle, focusing on the use of information that is present rather than the impact of information that is absent. It examines how individuals assign value in uncertain decisions based on the partial information they do have. While a main effect of gender on value is not observed, there is an enhanced optimism bias in how both favorable and unfavorable information influences the subjective value of ambiguous financial prospects for male compared to female participants. Unpacking these effects suggests multiple mechanisms, including a significant contribution of risk processing. Specifically, favorable and unfavorable information are over- and underweighted respectively in male participants estimated likelihood of a winning outcome, and unfavorable information is underweighted in estimating certainty. There also is an interaction of gender and risk preferences, such that value increases more for male participants as the subjectively estimated likelihood of winning increases. A second experiment demonstrates this risk interaction effect is also observed for objective probabilities of winning, suggesting that the relationship between value and risk uses similar mechanisms across layers of uncertainty