Agata Michalaszek Warsaw School of Social Psychology Information search patterns in risk judgment...
-
Upload
madison-chambers -
Category
Documents
-
view
215 -
download
0
Transcript of Agata Michalaszek Warsaw School of Social Psychology Information search patterns in risk judgment...
Agata MichalaszekWarsaw School of Social
Psychology
Information search patterns in risk judgment and in risky choices
Expectation Models
• rational choice is based on max EV
• logarithmic function of utility (Bernoulli, 1738, 1954)
• objective value was replaced with subjectvie utility
• people violate EU theory (Allais, 1953)
and common ratio rule
i
n
iivpEV
1
)(1
i
n
ii vupEU
Expectation Models – nonlinear functions of value and p
• Prospect Theory – value of each outcome is weighted by a decision weight ╥(p) – nonlinear function of probability (Kahneman and Tversky, 1979)
• CPT - the separable decision weights was replaced with cumulative (rank-dependent) decision weights (Kahneman and Tversky, 1992)
)()( 11
1 pxvVn
i
Expectation Models – the same rule
• all those models (i.e. extensions of EV):EV, EU, SEU, OPT, CPT contains the same rule – people choose ‘the best’ alternative by maximizing the expected value
Is this a single way to look for a solution to inconsistencies between the EV rule and
actual behavior?
Two approaches
Extensions of EV rule
i.e. nonlinear v and p functions
Investigation of the way in which people
think
• e.g., how they acquire information?
• Information board (Payne, 1976)
Information searching due to EV
wl(pl) * l(loss) + wg(pg) * g(gain)
(e.g. Coombs and Lehner, 1984; Jia and Dyer, 1996; Jia, Dyer and Buttler, 1999; Luce and E.U. Weber, 1986; Sarin and M. Weber, 1993)
• probabilities and payoffs are combined multiplicatively
• each alternative is evaluated separately (global evaluation)
Pattern of information searching due to EV
• Situation 1
payoff1
p1
payoff2
p2
………payoffi
pi
• Situation 2
payoff1
p1
payoff2
p2
………payoffi
pi
Each alternative is evaluated separately.
Pattern of information searchingdue to DIM
• Situation 1
payoff1
p1
payoff2
p2
………payoffi
pi
• Situation 2
payoff1
p1
payoff2
p2
………payoffi
pi
Each dimension is evaluated separately. Dmensional Model – Payne, 1976
Two patterns of information searching
• Situation 1
payoff1
p1
payoff2
p2
………payoffi
pi
• Situation 2
payoff1
p1
payoff2
p2
………payoffi
pi EV
DIM
Main research question
Do people use:
the multiplicative or the dimensional pattern
of information acquisition,
while making risky choices ?
Risk judgement and choice: the same or not
• another important issue: risk judgement and choice
• the same or not?
• no risk concept in EV models
• risk attitudes follow from v and p functions
R–V Models – Markowitz:
• decisions are based on both expected return and its uncertainty or variability (related to risk) (Markowitz, 1959)
• risk is associated with the dispersion of the random variable
• risk as indepedent concept
WTP(x) = f {V(x), R(x)}
Research Questions
Risk judgment
• Do people use the multiplicative or the dimensional pattern of information acquisition
• Relative importance of positive and negative dimensions
• Relative importance of values and probabilities
Choice• Do people use the
multiplicative or the dimensional pattern of information acquisition
• Relative importance of positive and negative dimensions
• Relative importance of values and probabilities
Experiment – Design
• Subjects:• 120 respondents
• Measure of perceived risk• subjects rated riskiness on an 11-point scale (from 0 ‘not
risky at all’ to 10 ‘extremely risky’)
• Measure of decision making (choice)• subjects chose one of three options
0 10
a) option A b) option B c) option C
Experiment – Design: scenarios
• respondents were presented with 7 different risky situations related to financial risk, health hazards, gambling, etc.
• every situation consisted of 3 alternative options (A, B, C)
• each option consisted of 4 possible outcomes - 2 losses and 2 gains and propabilities of those outcomes
• participants could disclose as much detailed information about the options as necessary to judge their riskiness and to choose one of them
Experiment – Design: MouseLabWEB
• the MouseLabWEB idea was to monitor the information acquisition process of decision making
• information is hidden behind boxes – to access the information, the decision maker moves the mouse pointer over the box on the screen
A B Cmax gain
pmax gain
gain
pgain
loss
ploss
max loss
Pmax loss
http://www.mouselabweb.org/
Results
• number of box• average – 12 information• after 6th information less
systematic patterns• checked first 6 steps
A B Cmax gain 1 9 17pmax gain 2 10 18gain 3 11 19pgain 4 12 20loss 5 13 21ploss 6 14 22max loss 7 15 23Pmax loss 8 16 24
Results: information search patterns – Risk judgement
• 69,9% - due to dimensional model
• 4,2% - due to multiplicative model
• 26% - without any model 0
50
100
150
200
250
300
nomodel
DIM EV
%
amount ofreactions
Results: information search patterns - Choice
• 67,5% - due to dimensional model
• 1,8% - due to multiplicative model
• 30,8% - without any model 0
50
100
150
200
250
300
nomodel
DIM EV
%
amount ofreactions
Results: information search patterns
Risk judgement
• 69,9% - due to dimensional model
• 4,2% - due to multiplicative model
• 26% - without any model
Choice
• 67,5% - due to dimensional model
• 1,8% - due to multiplicative model
• 30,8% - without any model
Results: positive/negative outcomes
• positive/negative on top – biased• 2 display orders:
• control: the same amount of information
the same ratio pos/neg
pos payoff … … … neg payoff
neg payoff … … … pos payoff
vs
Results: positive/negative outcomes
Risk judgement• ratio pos/neg M=0,95
• amount of positive information M=7,04
• amount of negative information M=7,62
Choice• ratio pos/neg
M=0,96
• amount of positive information M=6,87
• amount of negative information M=7,50
Results: value or p
Risk judgement• ratio value/p
M=1,30
Choice• ratio value/p
M=1,23
ratio =
valuep
value
p= 1 < 1 > 1
Results: value or p
Risk judgement
• 41% amount value=p• 28,1% amount value>p• 16,6% only value• 11,2% amount value<p• 3,1% only p
Choice
• 47% amount value=p• 24,8% amount value>p• 12% only value• 12,8% amount value<p• 3,5% only p
Results: value or p for different situations
• ratio value/p different for different situations
• more p is considered for financial risk: investmenst and gambles
• more value is considered for health hazards and extreme sports
F(1,56)=0.612; p=.437
F(1,53)=5,475; p=.023
F(1,49)=0.117; p=.734
Conclusions:
• the majority of information search pattern is due to DIM model (about 70%)
• no differences in amount of considered infrmation between positive and negative outcomes
• p more frequent for precise information (‘experiments’)values more frequent for less precise information (‘natural setting’)