Research topic: The psychology of risk
Life is a gamble: When we choose between potential spouses, holiday locations, or medical treatments, we typically do not know for sure which of the possible outcomes we will actually experience. At best, we have a hunch about the probability with which the outcomes might occur.
The question of how people make choices between such risky options has a long tradition in decision science. Many investigators of risky choice have employed a simple drosophila task: monetary gambles in which the possible consequences and their probability of occurrence are explicitly stated. Risky choices in real life, however, often unfold under circumstances that are not captured by this drosophila task.
First, in many situations information concerning the possible outcomes and probabilities of our risky choices are not explicitly described but need to be learned through experience. The specific cognitive processes of learning about risky options can lead to choices drastically different from purely description-based choices. Our goal is to study how and why decisions from experience deviate from decisions from description ("The description-experience gap: Its causes and its consequences").
Second, many real-life decisions are not primarily about money but involve outcomes as diverse as our health, our psychological well-being, and our professional success. Many of these decisions thus carry substantial affective consequences. Our goal is to understand how affects impact on our risky decisions and the cognitive processes recruited to process affect-rich outcomes and probability information ("How affect impacts risky choice").
The description-experience gap: Its causes and its consequences
The four-fold pattern of risk summarizes the observation that participants in decisions from description are risk averse for large-probability gains and small-probability losses. Interestingly, this is not always borne out in people's real-life decision making. Governments, for example, have found it difficult to encourage their citizens to take precautions (e.g., purchasing insurances) against small-probability losses such as floods or volcano eruptions (Hertwig, in press).
One explanation for this discrepancy between theory and practice is that in many of their real-world decisions people do not get to enjoy the convenience of described outcomes and probabilities. For instance, when they decide whether to back up their computer's hard drive, cross a busy street (Hoffrage, Weber, Hertwig, & Chase, 2003), or go out on a date, they make such decisions either in the void of complete ignorance or in the twilight of their own often limited experience with their real-world options. In the latter case, they make decisions from experience.
Recent research has consistently documented that decisions from experience and decisions from description can lead to substantially different choices. This description-experience gap has important implications for our understanding of human decision-making processes as well as for public policy, as many choices we make in everyday life are decisions from experience.
Key investigators: Ralph Hertwig, Thomas Hills & Renato Frey
Current project: SNF project "The description-experience gap: Its robustness, its causes and its consequences"
Key references:
- Hau, R., Pleskac, T. J., & Hertwig, R. (2010). Decisions from experience and statistical probabilities: Why they trigger different choices than a priori probabilities. Journal of Behavioral Decision Making, 32, 48–68. doi:10.1002/bdm.665 PDF
- Hertwig, R., & Pleskac, T. J. (2010). Decisions from experience: Why small samples? Cognition, 115, 225–237. doi:10.1016/j.cognition.2009.12.009 PDF
- Hertwig, R., & Erev, I. (2009). The description–experience gap in risky choice. Trends in Cognitive Sciences, 13, 517–523. doi:10.1016/j.tics.2009.09.004 PDF
- Hau, R., Pleskac, T. J., Kiefer, J., & Hertwig, R. (2008). The description–experience gap in risky choice: The role of sample size and experienced probabilities. Journal of Behavioral Decision Making, 21, 493–518. doi:10.1002/bdm.598 PDF
How affect impacts risky choice
A key characteristic of our daily decision making is that the expected consequences of the decisions often cannot be predicted with certainty, turning our decision into risky choices. Usually, risky choice is studied by examining people’s choices between monetary gambles. Most of our daily decisions, however, are not about money, but about things like where to go on holidays, whom to marry, or whether to undergo a risky surgery; that is, decisions that evoke emotions. Recent evidence has demonstrated that affects that are associated with the prospects have an impact on our decisions. We refer to this phenomenon as the affective choice gap.
With this project, we aim to further elucidate the affective choice gap, examine its generality, and test the different theoretical accounts for this effect against each other. Specifically, we are interested in the cognitive mechanisms underlying affect-rich and affect-poor choices and whether there is evidence for probability neglect using process tracing tools. In addition, we explore the neural correlates of the affective choice gap and the hypothesized neglect of probabilities. Finally, we test the possibility that—assuming the increased focus on emotional goals in older-adult decision makers—the affective choice gap is more pronounced among older adults, relative to younger adults.
Key investigators: Thorsten Pachur & Renata Suter
Current project: SNF project "How affect impacts risky choice: Mechanisms, and practical implications"
Key references:
- Rottenstreich, Y. & Hsee, C. K. (2001). Money, kisses, and electric shocks: On the affective psychology of risk. Psychological Science, 12, 185–190.doi:10.1111/1467-9280.00334 PDF
- Sunstein, C. R. (2003). Terrorism and probability neglect. Journal of Risk and Uncertainty, 26, 121–136.doi:10.1023/A:1024111006336 PDF
