Information Processing in Decisions under Risk: Evidence for Compensatory Strategies based on Automatic Processes
AbstractMany everyday decisions have to be made under risk and can be interpreted as choices between gambles with different outcomes that are realized with specific probabilities. The underlying cognitive processes were investigated by testing six sets of hypotheses concerning choices, decision times, and information search derived from cumulative prospect theory, decision field theory, priority heuristic and parallel constraint satisfaction models. Our participants completed forty decision tasks of two gambles with two non-negative outcomes each. Information search was recorded using eye-tracking technology. Results for all dependent measures conflict with the prediction of the non-compensatory priority heuristic and indicate that individuals use compensatory strategies. Choice proportions are well predicted by a cumulative prospect theory. Process measures, however, indicate that individuals do not rely on deliberate calculations of weighted sums. Information integration processes seem to be better explained by models that partially rely on automatic processes such as decision field theory or parallel constraint satisfaction models.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2008_42.
Date of creation: Nov 2008
Date of revision:
Risky Decisions; Cumulative Prospect Theory; Decision Field Theory; Priority Heuristic; Parallel Constraint Satisfaction; Eye Tracking; Intuition;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Michael H. Birnbaum, 2008. "New tests of cumulative prospect theory and the priority heuristic: Probability-outcome tradeoff with branch splitting," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 3, pages 304-316, April.
- Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
- Andreas Glöckner & Tilmann Betsch, 2008. "Multiple-Reason Decision Making Based on Automatic Processing," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2008_12, Max Planck Institute for Research on Collective Goods.
- Andreas Glöckner & Tilmann Betsch, 2008. "Modeling Option and Strategy Choices with Connectionist Networks: Towards an Integrative Model of Automatic and Deliberate Decision Making," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2008_02, Max Planck Institute for Research on Collective Goods.
- Birnbaum, Michael H. & LaCroix, Adam R., 2008. "Dimension integration: Testing models without trade-offs," Organizational Behavior and Human Decision Processes, Elsevier, vol. 105(1), pages 122-133, January.
- Nina Horstmann & Andrea Ahlgrimm & Andreas Gl�ckner, 2009. "How distinct are intuition and deliberation? An eye-tracking analysis of instruction-induced decision modes," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(5), pages 335-354, August.
- Nina Horstmann & Andrea Ahlgrimm & Andreas Glöckner, 2009. "How Distinct are Intuition and Deliberation? An Eye-Tracking Analysis of Instruction-Induced Decision Modes," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2009_10, Max Planck Institute for Research on Collective Goods.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marc Martin).
If references are entirely missing, you can add them using this form.