IDEAS home Printed from https://ideas.repec.org/a/pal/palcom/v12y2025i1d10.1057_s41599-025-05585-2.html
   My bibliography  Save this article

Beyond monetary outcomes: the probability-range reflection effect across decision domains

Author

Listed:
  • Elżbieta Babula

    (University of Gdańsk)

  • Maciej Kos

    (Northeastern University)

  • Urszula Mrzygłód

    (University of Gdańsk)

  • Dagmara Wach

    (University of Gdańsk)

  • Marek Kołatka

    (University of Gdańsk)

Abstract

The reflection effect, a key component of prospect theory, highlights the reversal of risk preferences when decision outcomes change from gains to losses. The effect’s potential pervasiveness and impact on everyday decision-making necessitates a nuanced characterization. As emerging evidence demonstrates the domain-specificity of risk preferences, this study extends the investigation of the reflection effect beyond monetary outcomes to multiple life domains and proposes a probability-range approach to studying the reflection effect. In a between-subjects stated-preference experiment, we tested whether the probability-range reflection effect exists in both financial (gambling, investment) and non-financial (social, recreational, health, ethical) domains. By varying probability levels, we estimated the shapes of choice-probability curves using logistic regression models. Participants (525 adult US residents, representative in age and sex; 51.6% women, mean age 46 years, SD = 16, range = [18, 82]) saw vignettes corresponding to six risk domains of the Domain-Specific Risk-Taking scale. Each vignette was randomly assigned to a gain or loss prospect and one of nine probability levels. Based on each vignette, participants chose either a safe (certain) outcome or a risky lottery. Comparing the proportions of selected risky lotteries across all probability levels in gain and loss prospects allowed us to characterize the reflection effect on a domain-by-domain basis. We detected the effect in all except the ethical domain, where participants exhibited strong risk aversion across all probability levels and prospects. Notably, we observed an “opposite reflection effect” in the social domain, with higher risk-taking for gains than losses. These findings reveal important domain-specific variations in the reflection effect. Our probability-range approach provides a more nuanced characterization of risk preferences, challenging the universality of the reflection effect and suggesting the need for domain-specific considerations in decision-making models. These results have significant implications for decision theory and the design of interventions targeting risk-related behaviors across various life domains.

Suggested Citation

  • Elżbieta Babula & Maciej Kos & Urszula Mrzygłód & Dagmara Wach & Marek Kołatka, 2025. "Beyond monetary outcomes: the probability-range reflection effect across decision domains," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-17, December.
    • Handle: RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-05585-2
    DOI: 10.1057/s41599-025-05585-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41599-025-05585-2
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41599-025-05585-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Zhu, Minfan & Wang, Jun & Xie, Xiaofei, 2022. "Maximize when valuable: The domain specificity of maximizing decision-making style," Judgment and Decision Making, Cambridge University Press, vol. 17(3), pages 574-597, May.
    2. 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.
    3. James Alm & Kim M. Bloomquist & Michael McKee, 2017. "When You Know Your Neighbour Pays Taxes: Information, Peer Effects and Tax Compliance," Fiscal Studies, Institute for Fiscal Studies, vol. 38, pages 587-613, December.
    4. Handa, Jagdish, 1977. "Risk, Probabilities, and a New Theory of Cardinal Utility," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 97-122, February.
    5. James Alm & Kim M. Bloomquist & Michael McKee, 2017. "When You Know Your Neighbour Pays Taxes: Information, Peer Effects and Tax Compliance," Fiscal Studies, Institute for Fiscal Studies, vol. 38, pages 587-613, December.
    6. Krull, Sebastian & Loschelder, David D. & Pelster, Matthias, 2024. "The impact of (social) anchors on Prospect Theory’s value function," The Quarterly Review of Economics and Finance, Elsevier, vol. 98(C).
    7. van de Wouw, Didrika S. & McKay, Ryan T. & Averbeck, Bruno B. & Furl, Nicholas, 2022. "Explaining human sampling rates across different decision domains," Judgment and Decision Making, Cambridge University Press, vol. 17(3), pages 487-512, May.
    8. Didrika S. van de Wouw & Ryan T. McKay & Bruno B. Averbeck & Nicholas Furl, 2022. "Explaining human sampling rates across different decision domains," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 17(3), pages 487-512, May.
    9. Paul Slovic & Melissa L. Finucane & Ellen Peters & Donald G. MacGregor, 2004. "Risk as Analysis and Risk as Feelings: Some Thoughts about Affect, Reason, Risk, and Rationality," Risk Analysis, John Wiley & Sons, vol. 24(2), pages 311-322, April.
    10. repec:bla:jfinan:v:53:y:1998:i:5:p:1775-1798 is not listed on IDEAS
    11. repec:cup:judgdm:v:17:y:2022:i:3:p:487-512 is not listed on IDEAS
    12. Adam Oliver, 2018. "Your money and your life: Risk attitudes over gains and losses," Journal of Risk and Uncertainty, Springer, vol. 57(1), pages 29-50, August.
    13. Mitton, Todd & Vorkink, Keith & Wright, Ian, 2018. "Neighborhood effects on speculative behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 151(C), pages 42-61.
    14. Adrian Bruhin & Helga Fehr-Duda & Thomas Epper, 2010. "Risk and Rationality: Uncovering Heterogeneity in Probability Distortion," Econometrica, Econometric Society, vol. 78(4), pages 1375-1412, July.
    15. George Wu & Richard Gonzalez, 1996. "Curvature of the Probability Weighting Function," Management Science, INFORMS, vol. 42(12), pages 1676-1690, December.
    16. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
    17. Oliver, Adam, 2018. "Your money and your life: risk attitudes over gains and losses," LSE Research Online Documents on Economics 88583, London School of Economics and Political Science, LSE Library.
    18. repec:cup:judgdm:v:17:y:2022:i:3:p:574-597 is not listed on IDEAS
    19. Minfan Zhu & Jun Wang & Xiaofei Xie, 2022. "Maximize when valuable: The domain specificity of maximizing decision-making style," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 17(3), pages 574-597, May.
    20. Shefrin, Hersh & Statman, Meir, 1985. "The Disposition to Sell Winners Too Early and Ride Losers Too Long: Theory and Evidence," Journal of Finance, American Finance Association, vol. 40(3), pages 777-790, July.
    21. Ferdinand M. Vieider & Mathieu Lefebvre & Ranoua Bouchouicha & Thorsten Chmura & Rustamdjan Hakimov & Michal Krawczyk & Peter Martinsson, 2015. "Common Components Of Risk And Uncertainty Attitudes Across Contexts And Domains: Evidence From 30 Countries," Journal of the European Economic Association, European Economic Association, vol. 13(3), pages 421-452, June.
    22. Susan K. Laury & Charles A. Holt, 2008. "Further reflections on the reflection effect," Research in Experimental Economics, in: Risk Aversion in Experiments, pages 405-440, Emerald Group Publishing Limited.
    23. Battalio, Raymond C & Kagel, John H & Jiranyakul, Komain, 1990. "Testing between Alternative Models of Choice under Uncertainty: Some Initial Results," Journal of Risk and Uncertainty, Springer, vol. 3(1), pages 25-50, March.
    24. Paul J. H. Schoemaker, 1990. "Are Risk-Attitudes Related Across Domains and Response Modes?," Management Science, INFORMS, vol. 36(12), pages 1451-1463, December.
    25. Mohammed Abdellaoui, 2000. "Parameter-Free Elicitation of Utility and Probability Weighting Functions," Management Science, INFORMS, vol. 46(11), pages 1497-1512, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arjun Chatrath & Rohan A. Christie‐David & Hong Miao & Sanjay Ramchander, 2019. "Losers and prospectors in the short‐term options market," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 39(6), pages 721-743, June.
    2. Ferdinand M. Vieider & Clara Villegas-Palacio & Peter Martinsson & Milagros Mejía, 2016. "Risk Taking For Oneself And Others: A Structural Model Approach," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 879-894, April.
    3. Peter Brooks & Simon Peters & Horst Zank, 2014. "Risk behavior for gain, loss, and mixed prospects," Theory and Decision, Springer, vol. 77(2), pages 153-182, August.
    4. Filiz-Ozbay, Emel & Guryan, Jonathan & Hyndman, Kyle & Kearney, Melissa & Ozbay, Erkut Y., 2015. "Do lottery payments induce savings behavior? Evidence from the lab," Journal of Public Economics, Elsevier, vol. 126(C), pages 1-24.
    5. Jakusch, Sven Thorsten & Meyer, Steffen & Hackethal, Andreas, 2019. "Taming models of prospect theory in the wild? Estimation of Vlcek and Hens (2011)," SAFE Working Paper Series 146, Leibniz Institute for Financial Research SAFE, revised 2019.
    6. Víctor González-Jiménez, 2021. "Incentive contracts when agents distort probabilities," Vienna Economics Papers vie2101, University of Vienna, Department of Economics.
    7. Campos-Vazquez, Raymundo M. & Cuilty, Emilio, 2014. "The role of emotions on risk aversion: A Prospect Theory experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 50(C), pages 1-9.
    8. Nathalie Etchart-Vincent & Olivier l’Haridon, 2011. "Monetary incentives in the loss domain and behavior toward risk: An experimental comparison of three reward schemes including real losses," Journal of Risk and Uncertainty, Springer, vol. 42(1), pages 61-83, February.
    9. Michelle S. Segovia & Marco A. Palma & Jayson L. Lusk & Andreas C. Drichoutis, 2025. "Visual formats in risk preference elicitation: What catches the eye?," Journal of Risk and Uncertainty, Springer, vol. 70(3), pages 275-303, June.
    10. Eyal Baharad & Doron Kliger, 2013. "Market failure in light of non-expected utility," Theory and Decision, Springer, vol. 75(4), pages 599-619, October.
    11. Georgalos, Konstantinos & Paya, Ivan & Peel, David A., 2021. "On the contribution of the Markowitz model of utility to explain risky choice in experimental research," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 527-543.
    12. Mary Riddel, 2012. "Comparing risk preferences over financial and environmental lotteries," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 135-157, October.
    13. Abdellaoui, Mohammed & Kemel, Emmanuel & Panin, Amma & Vieider, Ferdinand M., 2019. "Measuring time and risk preferences in an integrated framework," Games and Economic Behavior, Elsevier, vol. 115(C), pages 459-469.
    14. Kairies-Schwarz, Nadja & Kokot, Johanna & Vomhof, Markus & Weßling, Jens, 2017. "Health insurance choice and risk preferences under cumulative prospect theory – an experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 374-397.
    15. Georgalos, Konstantinos, 2024. "Gender effects for loss aversion: A reconsideration," Journal of Economic Psychology, Elsevier, vol. 105(C).
    16. Bart de Langhe & Stefano Puntoni, 2015. "Bang for the Buck: Gain-Loss Ratio as a Driver of Judgment and Choice," Management Science, INFORMS, vol. 61(5), pages 1137-1163, May.
    17. Victor H. Gonzalez-Jimenez, 2019. "Contracting Probability Distortions," Vienna Economics Papers vie1901, University of Vienna, Department of Economics.
    18. Hamza Bahaji, 2011. "Incentives from stock option grants: a behavioral approach," Post-Print halshs-00681611, HAL.
    19. Victor H. Gonzalez-Jimenez, 2019. "Contracting Probability Distortions," Vienna Economics Papers 1901, University of Vienna, Department of Economics.
    20. Laurent Denant-Boemont & Olivier L’Haridon, 2013. "La rationalité à l'épreuve de l'économie comportementale," Revue française d'économie, Presses de Sciences-Po, vol. 0(2), pages 35-89.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-05585-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: https://www.nature.com/palcomms/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.