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Keep your budget together! Investigating determinants on risky decision-making about losses

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  • Marc Wyszynski
  • Adele Diederich

Abstract

The present study investigates the influence of framing, different amounts to lose, and probabilities of a risky and sure choice option, time limits, and need on risky decision-making. For a given block of trials, participants were equipped with a personal budget (number of points). On each trial within a block, a specific initial amount is possibly taken from the budget by the outcome of a gamble or the choice of a sure loss option. The goal was to avoid losing points from the budget for not falling below a predefined need threshold. Three different levels of induced need were included. Employing a psychophysical experimental approach, we furthermore tested a sequential component of human risk behavior towards a need threshold inspired by research on animal foraging behavior. Risk-sensitivity models and the Stone-Geary framework serve as generating hypotheses on need thresholds. We found that framing, need, and probabilities influenced risky choices. Time limits and initial amounts moderated the framing effect. No sequential component was observed.

Suggested Citation

  • Marc Wyszynski & Adele Diederich, 2022. "Keep your budget together! Investigating determinants on risky decision-making about losses," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-17, March.
    • Handle: RePEc:plo:pone00:0265822
    DOI: 10.1371/journal.pone.0265822
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    1. Levin, Irwin P. & Schneider, Sandra L. & Gaeth, Gary J., 1998. "All Frames Are Not Created Equal: A Typology and Critical Analysis of Framing Effects," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 149-188, November.
    2. repec:cup:judgdm:v:13:y:2018:i:6:p:529-546 is not listed on IDEAS
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