Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events?
When faced with risky decisions, people tend to be risk averse for gains and risk seeking for losses (the reflection effect). Studies examining this risk-sensitive decision making, however, typically ask people directly what they would do in hypothetical choice scenarios. A recent flurry of studies...
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Public Library of Science (PLoS)
2011
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oai:doaj.org-article:6145a6b01b08475aa37302d57eb2a3082021-11-18T06:52:45ZOf black swans and tossed coins: is the description-experience gap in risky choice limited to rare events?1932-620310.1371/journal.pone.0020262https://doaj.org/article/6145a6b01b08475aa37302d57eb2a3082011-01-01T00:00:00Zhttps://www.ncbi.nlm.nih.gov/pmc/articles/pmid/21673807/pdf/?tool=EBIhttps://doaj.org/toc/1932-6203When faced with risky decisions, people tend to be risk averse for gains and risk seeking for losses (the reflection effect). Studies examining this risk-sensitive decision making, however, typically ask people directly what they would do in hypothetical choice scenarios. A recent flurry of studies has shown that when these risky decisions include rare outcomes, people make different choices for explicitly described probabilities than for experienced probabilistic outcomes. Specifically, rare outcomes are overweighted when described and underweighted when experienced. In two experiments, we examined risk-sensitive decision making when the risky option had two equally probable (50%) outcomes. For experience-based decisions, there was a reversal of the reflection effect with greater risk seeking for gains than for losses, as compared to description-based decisions. This fundamental difference in experienced and described choices cannot be explained by the weighting of rare events and suggests a separate subjective utility curve for experience.Elliot A LudvigMarcia L SpetchPublic Library of Science (PLoS)articleMedicineRScienceQENPLoS ONE, Vol 6, Iss 6, p e20262 (2011) |
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DOAJ |
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DOAJ |
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EN |
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Medicine R Science Q |
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Medicine R Science Q Elliot A Ludvig Marcia L Spetch Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events? |
| description |
When faced with risky decisions, people tend to be risk averse for gains and risk seeking for losses (the reflection effect). Studies examining this risk-sensitive decision making, however, typically ask people directly what they would do in hypothetical choice scenarios. A recent flurry of studies has shown that when these risky decisions include rare outcomes, people make different choices for explicitly described probabilities than for experienced probabilistic outcomes. Specifically, rare outcomes are overweighted when described and underweighted when experienced. In two experiments, we examined risk-sensitive decision making when the risky option had two equally probable (50%) outcomes. For experience-based decisions, there was a reversal of the reflection effect with greater risk seeking for gains than for losses, as compared to description-based decisions. This fundamental difference in experienced and described choices cannot be explained by the weighting of rare events and suggests a separate subjective utility curve for experience. |
| format |
article |
| author |
Elliot A Ludvig Marcia L Spetch |
| author_facet |
Elliot A Ludvig Marcia L Spetch |
| author_sort |
Elliot A Ludvig |
| title |
Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events? |
| title_short |
Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events? |
| title_full |
Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events? |
| title_fullStr |
Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events? |
| title_full_unstemmed |
Of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events? |
| title_sort |
of black swans and tossed coins: is the description-experience gap in risky choice limited to rare events? |
| publisher |
Public Library of Science (PLoS) |
| publishDate |
2011 |
| url |
https://doaj.org/article/6145a6b01b08475aa37302d57eb2a308 |
| work_keys_str_mv |
AT elliotaludvig ofblackswansandtossedcoinsisthedescriptionexperiencegapinriskychoicelimitedtorareevents AT marcialspetch ofblackswansandtossedcoinsisthedescriptionexperiencegapinriskychoicelimitedtorareevents |
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