The weight of experience: an investigation of probability weighting under decisions from experience

In decisions from experience tasks objective information regarding payoffs and probabilities must be inferred from samples of possible outcomes. A series of recent experiments has revealed that people show deviating choice behaviour in such tasks, indicating underweighting of small probabilities instead of overweighting of small probabilities as in decisions from description. In a range of experiments, the research presented in this thesis provides a new direction by showing that such reversals from overweighting to underweighting in decisions from experience are very robust and can be replicated even if all the existing explanations - sampling error, recency weighting and judgement error - are experimentally controlled for. Furthermore, reversals were replicated within common decision making biases like the common ratio effect. An important, but unexpected, new finding has been the observation of a reversed reflection effect under decisions from experience. This suggests that the difference between choice behaviour may not be restricted to underlying transformations of probabilities, as suggested in the literature. Drawing from an extensive range of model tests and parameter estimations, it is also demonstrated that the differences are reflected in the best fitting parameter values for prospect theory under decisions from experience. However, it is also shown that simple reinforcement models, which provide a more intuitive rationale for experiential choice behaviour, can account for the data just as well, without any assumptions regarding the weighting of probabilities

How incidental values from the environment affect decisions about money, risk, and delay

How different are £0.50 and £1.50, or "a small chance" and "a good chance", or "three months" and "nine months"? Our experiments show that people behave as if these differences alter after incidental everyday experiences. Preference for a £1.50 lottery rather than a £0.50 lottery was stronger after exposure to intermediate supermarket prices. Preference for "a good chance" of winning rather than "a small chance" was stronger after predicting intermediate probabilities of rain. Preference for consumption in "three month" rather than "nine months" was stronger after planning for an intermediate birthday. These fluctuations offer a direct challenge to economic accounts which translate monies, risks, and delays into subjective equivalents by stable functions. The decision by sampling model, in which subjective values are rank positions constructed from comparisons with samples of monies, probabilities, or delays, predicts these effects and indicates a primary role for sampling in decision making

Are probabilities overweighted or underweighted when rare outcomes are experienced (rarely)?

When making decisions involving risky outcomes on the basis of verbal descriptions of the outcomes and their associated probabilities, people behave as if they overweight small probabilities. In contrast, when the same outcomes are instead experienced in a series of samples, people behave as if they underweight small probabilities. We present two experiments showing that the existing explanations of the underweighting observed in decisions from experience are not sufficient to account for the effect. Underweighting was observed when participants experienced representative samples of events, so it cannot be attributed to undersampling of the small probabilities. In addition, earlier samples predicted decisions just as well as later samples did, so underweighting cannot be attributed to recency weighting. Finally, frequency judgments were accurate, so underweighting cannot be attributed to judgment error. Furthermore, we show that the underweighting of small probabilities is also reflected in the best-fitting parameter values obtained when prospect theory, the dominant model of risky choice, is applied to the data

When Transaction-Level Wage Transparency Can Increase Consumer Preference

Firms are usually reluctant to disclose information about the production costs of their goods and services; however, some firms have recently started to disclose cost information to consumers. This research examines the consequences of disclosing transaction-level wage information on consumer preferences. Six experiments, both in field and lab settings across multiple service domains, document that disclosing a service worker’s compensation can increase consumer preference for that firm’s service if the compensation is sufficiently high (i.e., perceived as fair by consumers). This greater preference for services provided in a fair-wage setting is driven by consumers’ feelings of anticipated guilt and higher expectations concerning quality. Available social norms regarding fair compensation and the nature of the service worker (human vs. non- human) are both identified as important boundary conditions of the proposed process. This research offers a first step toward understanding the psychological and behavioral consequences of disclosing transaction-level wage information to consumers, thereby enabling managers to better identify when they should disclose wage information as part of their marketing strategy. This research also informs policy makers on how to encourage social preferences and consumer choices in order to promote fair outcomes for consumers, firms, and workers

The weight of experience : an investigation of probability weighting under decisions from experience

In decisions from experience tasks objective information regarding payoffs and probabilities must be inferred from samples of possible outcomes. A series of recent experiments has revealed that people show deviating choice behaviour in such tasks, indicating underweighting of small probabilities instead of overweighting of small probabilities as in decisions from description. In a range of experiments, the research presented in this thesis provides a new direction by showing that such reversals from overweighting to underweighting in decisions from experience are very robust and can be replicated even if all the existing explanations - sampling error, recency weighting and judgement error - are experimentally controlled for. Furthermore, reversals were replicated within common decision making biases like the common ratio effect. An important, but unexpected, new finding has been the observation of a reversed reflection effect under decisions from experience. This suggests that the difference between choice behaviour may not be restricted to underlying transformations of probabilities, as suggested in the literature. Drawing from an extensive range of model tests and parameter estimations, it is also demonstrated that the differences are reflected in the best fitting parameter values for prospect theory under decisions from experience. However, it is also shown that simple reinforcement models, which provide a more intuitive rationale for experiential choice behaviour, can account for the data just as well, without any assumptions regarding the weighting of probabilities.EThOS - Electronic Theses Online ServiceEconomic and Social Research Council (Great Britain) (ESRC)GBUnited Kingdo

Risky decision making : testing for violations of transitivity predicted by an editing mechanism

Transitivity is the assumption that if a person prefers A to B and B to C, then that person should prefer A to C. This article explores a paradigm in which Birnbaum, Patton and Lott (1999) thought people might be systematically intransitive. Many undergraduates choose C = ($96, .85;$90, .05; $12, .10) over A = ($96, .9; $14, .05;$12, .05), violating dominance. Perhaps people would detect dominance in simpler choices, such as A versus B = ($96, .9;$12, .10) and B versus C, and yet continue to violate it in the choice between A and C, which would violate transitivity. In this study we apply a true and error model to test intransitive preferences predicted by a partially effective editing mechanism. The results replicated previous findings quite well; however, the true and error model indicated that very few, if any, participants exhibited true intransitive preferences. In addition, violations of stochastic dominance showed a strong and systematic decrease in prevalence over time and viola

The average laboratory samples a population of 7,300 Amazon Mechanical Turk workers

Using capture-recapture analysis we estimate the effective size of the active Amazon Mechanical Turk (MTurk) population that a typical laboratory can access to be about 7,300 workers. We also estimate that the time taken for half of the workers to leave the MTurk pool and be replaced is about 7 months. Each laboratory has its own population pool which overlaps, often extensively, with the hundreds of other laboratories using MTurk. Our estimate is based on a sample of 114,460 completed sessions from 33,408 unique participants and 689 sessions across seven laboratories in the US, Europe, and Australia from January 2012 to March 2015

Framing climate change in frontline communities: anthropological insights on how mountain dwellers in the USA, Peru, and Italy adapt to glacier retreat

We report on anthropological research conducted in three mountain communities (in the USA, Italy and Peru), which have been directly affected by glacier retreat for over 40 years. Our mixed methods include ethnographic research, analysis of transcripts of interviews, focus groups and community meetings, and case studies of adaptation projects. Our findings indicate that local people are acute observers of change. They draw on two frames (climate change and community) in their discussions and projects but rely much more heavily on the latter frame. This pattern of drawing on the community frame, characteristic of all discussions, is most marked in the community meetings. The effectiveness of the community frame in supporting projects calls into question some widely shared notions about the role of belief in climate change as a crucial precondition for adaptation and challenges the “perceive–predict–act” model of climate change response

Risky Decision making: Testing for violations of transitivity predicted by an editing mechanism

Transitivity is the assumption that if a person prefers A to B and B to C, then that person should prefer A to C. This article explores a paradigm in which Birnbaum, Patton and Lott (1999) thought people might be systematically intransitive. Many undergraduates choose C = ($96, .85;$90, .05; $12, .10) over A = ($96, .9; $14, .05;$12, .05), violating dominance. Perhaps people would detect dominance in simpler choices, such as A versus B = ($96, .9;$12, .10) and B versus C, and yet continue to violate it in the choice between A and C, which would violate transitivity. In this study we apply a true and error model to test intransitive preferences predicted by a partially effective editing mechanism. The results replicated previous findings quite well; however, the true and error model indicated that very few, if any, participants exhibited true intransitive preferences. In addition, violations of stochastic dominance showed a strong and systematic decrease in prevalence over time and violated response independence, thus violating key assumptions of standard random preference models for analysis of transitivity

Data for The average laboratory samples a population of 7,300 Amazon Mechanical Turk workers 2012-2017

Using capture-recapture analysis we estimate the effective size of the active Amazon Mechanical Turk (MTurk) population that a typical laboratory can access to be about 7,300 workers. We also estimate that the time taken for half of the workers to leave the MTurk pool and be replaced is about 7 months. Each laboratory has its own population pool which overlaps, often extensively, with the hundreds of other laboratories using MTurk. Our estimate is based on a sample of 114,460 completed sessions from 33,408 unique participants and 689 sessions across seven laboratories in the US, Europe, and Australia from January 2012 to March 2015