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What factors promote or hinder volunteering within organizations and groups? This paper simultaneously explores the impact of individual, contextual, and sociocultural variables on decision making in a special type of social dilemma: the volunteer's dilemma game (VDG). The VDG provides a controlled experimental method for studying volunteering behaviors in an anonymous interactive environment. We developed six variations of the VDG and administered them to economics students in five different cultures (Ntotal = 603). Among other things, these VDGs varied whether the potential benefits of volunteering were certain or uncertain. Although the overall level of volunteering did not vary substantially across most cultural groups, we found that culture interacted with the size and (un)certainty of the benefits associated with volunteering, to influence volunteering decisions. We also found that religiosity (but not religious affiliation per se) increases volunteering and that men are less likely to volunteer when the returns to doing so are certain. These results extend our knowledge of behaviors in the VDG, and their potential drivers, with clear implications for understanding how culture, individual characteristics, and context jointly influence prosocial behavior and coordination. [ABSTRACT FROM AUTHOR]

A striking finding has emerged recently in the literature: When decision makers are faced with essentially the same choice, their preferences differ as a function of whether options are described or are “experienced” via observation and feedback. For example, when presented the described choice: (A) A 90% chance of $0 and a 10% chance of $10 or (B) $1 for sure, people tend to prefer (A). But when those same two options are experienced through observation of “draws” from two payoff distributions that match the described options, the modal preference reverses. Why? This is just one question that the papers in this special issue address. In addition, they address the rich repertoire of issues that arise when one considers experience-based choices. The decisions-from-experience paradigm—with its focus on the acquisition and integration of information prior to choice, as well the choice itself—taps many of the fundamentals of psychology (learning, memory, encoding, knowledge representation, modelling) thus inspiring novel and fruitful avenues for research. This paper reviews recent research on experience-based choice, and highlights the contribution of the papers in the special issue. The paper introduces a framework that places different types of decisions along a continuum of uncertainty about what one is choosing between, which emphasizes the rich and varied role of “experience” in decision making. It ends by identifying important unsolved questions that are ripe for future research. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Prescriptions for improving negotiation performance, including developing alternatives to negotiated agreements or setting high aspirations, often fail to consider the inherent uncertainty in such deliberations. Across three studies, this paper demonstrates that negotiators who address this uncertainty by unpacking their positive alternatives and aspirations (e.g., the likelihood of attaining an alternative job offer from Firm #1, Firm #2, or any other firm) judge these outcomes to be more likely to occur and achieve better negotiation outcomes compared with negotiators who consider these same outcomes as a single package (e.g., the likelihood of attaining an alternative job offer from any firm). Unpacking is not uniformly beneficial: unpacking potential negative outcomes (e.g., not receiving another job offer) leads negotiators to demand less in the current negotiation and claim less value as a result. [ABSTRACT FROM AUTHOR]

This paper reports the results of two experiments to investigate the effects of payoff alterations in two-person symmetric games. The initial experiment involved 60 subjects, each of whom could earn from £0 to £15, depending on the interaction of their decisions and the unknown decisions of one other person. All decisions were made without feedback to isolate the impact on subjects' behaviour of the game's parameters. A primary aim was to see if the games had strategically distinct structures, or whether uncertainty over the choice rule of others would influence choice behaviour and lessen this independence. An alternative model of rational choice, making allowance for uncertainty in the decision environment, was proposed to capture subjects' behaviour. The results indicated that the frontiers of most of the games had no impact on choice behaviour other than through the magnitude of the change in payoffs. The model received strong support across an identifiable set of 'frontierless' games. However, the variety of games was not sufficient to provide a comprehensive test. A second experiment was recently held to close these gaps. Fifty subjects took part, each of whom earned from A$0 to A$24, averaging A$17. The findings provided broad additional support for the theory. [ABSTRACT FROM AUTHOR]

Identifying discrepancies between normative prescriptions and actual behavior constitutes an important facet of studying judgment and decision making. Notwithstanding, alleged normative violations should be submitted to the most stringent tests before their existence is recognized. The present paper centers on participants' understanding of instructions and comprehension of the experimental task. As an example, we examine the “uncertainty effect” which, supposedly, violates canonical requirements of the theory of rational choice. Following this effect, people often value a lottery less than its worst possible realization, due to the uncertainty associated with the lottery. We empirically demonstrate that Gneezy et al.'s instructions were ambiguous. We show that only participants who miscomprehended the instructions exhibited a response pattern consistent with the uncertainty effect. Removing the ambiguity results in the elimination of the effect. Broader implications for the judgment and decision making literature are briefly discussed. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Malleability of preferences is a central tenet of behavioral decision theory. How malleable preferences really are, however, is a topic of debate. Do preference reversals imply preference construction? We argue that to claim preferences are construed, a demonstration of more extreme preference malleability than simple preference reversals is required: absolute preference sign changes within participants. If respondents value a prospect positively in 1 condition but negatively in a different condition, preferences cannot be considered stable. Such absolute preference sign changes are possible under uncertainty. In 2 incentive‐compatible experiments, we found participants were willing to pay to take part in a gamble and also demanded to be compensated to take part in a subsequent gamble with identical outcomes and probabilities. Such absolute preference sign changes within participants led to simultaneous risk aversion and risk seeking for the same risky prospect, suggesting that, at least in the domain of risky decisions, consumers' preferences are indeed malleable and construed. [ABSTRACT FROM AUTHOR]

The current paper explores choice among alternatives that can be classified into distinct classes. All the members of a particular class were ‘replicated alternatives’: they promised the same payoff distribution. Information to decision makers was limited to feedback concerning the realized (obtained and foregone) payoffs. Experiment 1 demonstrates that increasing the number of replicated alternatives creates confusion (which facilitates random choice) and changes the implications of the tendency to chase recent returns (i.e., select the alternative with the best recent outcomes). This effect, termed ‘confused chasing,’ facilitates risk seeking even when this behavior impairs expected earnings. Experiment 2 reveals that increasing the number of replicated alternatives can reduce (but does not eliminate) the tendency to underweight rare events. Experiment 3 shows that the relative importance of chasing and confusion is sensitive to the likelihood of realizing lower payoffs than the forgone payoffs. The main results are summarized with a simple model assuming that payoff sensitivity decreases with experienced regret. Copyright © 2006 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper addresses the effects of the anticipation of regret on decision making under uncertainty. Regret is a negative, cognitively based emotion that we experience when realizing or imagining that our present situation would have been better, had we decided differently. The experience of post-decisional regret is for a large part conditional on the knowledge of the outcomes of the rejected alternatives. A series of studies is reviewed in which it is shown that whether or not decision makers expect post-decisional feedback on rejected alternatives has a profound influence on the decisions they make. These studies, focusing on choice between gambles, consumer decision making and interpersonal decision making, also show that anticipated regret can promote risk-averse as well as risk-seeking choices. This review of empirical studies is followed by a discussion of the conditions under which we can expect the anticipation of regret to take place. [ABSTRACT FROM AUTHOR]

This paper concerns the evaluation and combination of subjective probability estimates for categorical events. We argue that the appropriate criterion for evaluating individual and combined estimates depends on the type of uncertainty the decision maker seeks to represent, which in turn depends on his or her model of the event space. Decision makers require accurate estimates in the presence of aleatory uncertainty about exchangeable events, diagnostic estimates given epistemic uncertainty about unique events, and some combination of the two when the events are not necessarily unique, but the best equivalence class definition for exchangeable events is not apparent. Following a brief review of the mathematical and empirical literature on combining judgments, we present an approach to the topic that derives from (1) a weak cognitive model of the individual that assumes subjective estimates are a function of underlying judgment perturbed by random error and (2) a classification of judgment contexts in terms of the underlying information structure. In support of our developments, we present new analyses of two sets of subjective probability estimates, one of exchangeable and the other of unique events. As predicted, mean estimates were more accurate than the individual values in the first case and more diagnostic in the second. [ABSTRACT FROM AUTHOR]

This paper examines the effect of uncertainty and inconsistency on the judgment of human performance. The results indicate that the effect of inconsistency on judgment is not mediated by subjective uncertainty. We find that both the level and the extremity of judgment decrease with uncertainty. These effects are explained, respectively, by uncertainty aversion and by regressiveness. We also find that both the level and the extremity of judgment of human performance increase with inconsistency. These effects are explained by reliance on integration rules in which judgment is based primarily on some aspects of the information, while other aspects are, to some extent, ignored. [ABSTRACT FROM AUTHOR]

This paper examines the management of foreign exchange risk in multinational corporations in light of the conclusions of previous empirical and theoretical investigations into decision making under uncertainty. Cognitive perceptions of risk and uncertainty are shown to underlie the hedging decisions made by corporate treasury managers, which are often demonstrably sub-optimal in a Bayesian expected utility framework. The findings suggest that simple principal-agent approaches to explaining seemingly sub-optimal corporate risk management preferences are inadequate inasmuch as they fail to account for the markedly different perspectives on risk and uncertainty taken by financial economists (qua economists) and corporate financial risk managers. [ABSTRACT FROM AUTHOR]

This paper examines the presumptions behind, and methods within, two approaches toward the analysis of decision problems - Conflict Analysis and Strategic Choice. These offer complementary perspectives, based respectively on particular notions of conflict and uncertainty. It is suggested that these perspectives can usefully be combined in order to provide more effective ways of helping with complex decision problems, and some preliminary forms of decision model are proposed. [ABSTRACT FROM AUTHOR]

This study reports three experiments which demonstrate path dependency in risky intertemporal choice. Consider a lottery to be resolved and paid in a future time period. One can obtain the present value of this lottery in three different ways: (1) eliciting directly the present certainty equivalent (CE) of the future lottery (direct path); (2) eliciting the future CE and then discounting this amount to the present (risk-time path); and (3) eliciting the present value of the risky prospect and then determining the CE of this current lottery (time-risk path). Standard rational choice models such as the discounted expected utility model, assume a multiplicative model, where all three methods mentioned above would yield the same value. We conducted three studies to examine if this is the case: Experiments 1 and 2 were based on a set of matching-task questions and Experiment 3 used a process-tracing design to analyze the natural sequence of decision making by the subjects. These three studies show that the evaluation of future gambles is path-dependent. The present values elicited under the time-risk and direct paths are, on average, higher than those reported under the risk-time path. In addition, we found evidence for a two-stage evaluation of risky future prospects: When evaluating a future gamble, individuals first assess the present value of the gamble (time discounting) and then they determine a certainty equivalent (probability discounting). Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Provides information on a selection of papers presented at the sixteenth Research Conference on Subjective Probability, Utility and Decision Making held in Leeds, England on April 18-21, 1997. Effects of anticipated regret in decision making under uncertainty; Evaluation of policy scenarios for metropolitan traffic in the next decades; Role of frequentistic information in judgments of risk and probability; Hypotheses about how the way in which people represent hypotheses affects the subjective probability people associate with them.

ABSTRACT The 'social insurance' hypothesis posits that individuals join cooperative groups and share resources in order to reduce environmental risk. Despite its significance for explaining cooperative groups' formation, in small-scale and in developing societies, the hypothesis has been subjected to little experimental testing. The present research is designed to examine the relative weight of the motivation for social insurance compared with other psychological motivations for sharing risk. We conducted two studies to test the tendency to share risk under different risk conditions and for groups of different sizes. A third experiment extends the risk-sharing research to situations involving losses instead of gains. The findings of the first two studies lend strong support to the risk-sharing hypothesis in the gain domain. For the loss domain, the results of the third experiment demonstrate an intriguing shift from strong reluctance to join groups under lower risk, to ubiquitous readiness to join groups under higher risk. We discuss these results in light of prospect theory and decisions from experience. Copyright © 2014 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

People utilize advice often with limited knowledge of their advisers' expertise. We examine the effects of learning mode on giving and receiving advice in two separate but linked studies. Advisers learned about a choice between two lotteries fromeither description or experience before writing advice. The decision makers only read this advice before choosing between the options. Advisers who learned from description provided better summarized informationmore confidently and were ultimately preferred by the decisionmakers. Advisers who learned from experience were more risk averse and tended to describe their experiences signaling their informational deficiency. Decision makers were sensitive to the subtle differences between the two cases, even when not informed of their adviser's learning mode. We discuss the implications of the adviser's learning mode within the context of various decision environments and the risk-uncertainty continuum. Advisers perform under risk when learning from description compared with performing under uncertainty when learning from experience. [ABSTRACT FROM AUTHOR]

ABSTRACT The present study sought to describe police officers' decision processes in simulated counter-terrorism events. Based on previous phase models of decision making and existing police policy in dealing with critical incidents of this nature, a descriptive SAFE-T (Situation Assessment, Formulate a plan, Execute a plan and Team learning) model was applied to team decision processes. Proximity and Lag Sequential analyses tested the occurrence of the predicted decision phases set out in the model; these results indicated that the model did not fully capture the complexity of the process. Specifically, further qualitative analyses (and comparisons to a 'Gold Standard' set of subject matter expert decisions, conducted with the benefit of removing ambient and time pressure stressors) illustrated that a complex combination of ambient (uncertainty), cognitive (accountability pressures) and organizational (an existing blame culture and lack of policy) factors 'derailed' officers from making 'save life' decisions. Instead, albeit in a minority of cases, they either made errors of omission by failing to make any decision at all or inappropriate choice deferrals (by insisting another agency made the decision or that the decision could be made later). The potential benefits of making the SAFE-T decision process and how derailment can occur explicit in police critical incident training events are discussed. Copyright © 2010 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Among psychologists and economists, prospect theory continues to be one of the most popular models of decision making. The theory's key property is reference dependence; specifically, how an individual's perception of loss or gain is dependent upon their starting point (i.e., the status quo). Although prospect theory is widely accepted, other authors have sought the inclusion of reference points besides the status quo. Initially these extensions focused on the importance of single reference points such as goals. More recently, authors have explained choice data by including multiple reference points within the value function. Multiple-reference-point theories generally assume that many choice situations possess an implicit or explicit goal, or point an individual will strive to obtain, and/or a minimum requirement (i.e., a 'lower bound') above which an individual will strive to stay. In two experiments, we present evidence that individuals can utilize the minimum requirement, status quo, and goal within a single risky decision task. Participants most often chose to maximize their chance of reaching reference points even when that decision was riskier, resulted in lower expected value, resulted in lower expected utility, or ran contrary to the predictions of prospect theory. Furthermore, salience and uncertainty moderated the use of goals and minimum requirements as reference points. Copyright © 2010 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Progress on a well-defined project can be described along a task dimension in terms of amount done, or as amount of work still to be completed. Time-limited projects can also be described on a temporal dimension in terms of time spent versus time left. Five experiments are reported showing that such frames have predictable implications for speakers as well as for listeners: Statements by a team leader about time spent and work left are perceived as suggestions to “hurry up,” whereas complementary statements about work done and time left indicate that the team can take it more easy. The first set of statements further implies that the team is behind schedule, whereas the last two statements suggest that the team is ahead of the plan. In line with this, speakers preferred work done and time left statements when they were ahead of schedule, but not when they were behind. “Hurry up” and “behind schedule” interpretations were also shown to be dependent upon stage, being more prominent in the final stages than during the initial stages of a project. Copyright © 2005 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Ambiguity avoidance denotes people's preference for gambling situations with known over unknown, or ambiguous, probability distributions. In four experiments we provide evidence for the interaction between competitiveness and knowledge in Ellsberg's task, in which people have a choice between a risky box (distribution of balls known) and an ambiguous box (distribution of balls not known). If the situation is perceived as competitive (the experimenter or an opponent is responsible for composing the boxes) people avoid ambiguity by betting on the box with the known probability distribution. If the task is perceived as cooperative (a partner or friend is composing the boxes) people are indifferent toward ambiguity or even ambiguity seeking. In addition, we find that people expect their winning odds to be less than even in the ambiguous box. Copyright © 2003 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

In each of two experiments respondents were asked to narrow a given set of multiattribute options to a final choice in three successive stages. Some participants were asked to record which options they would include at each stage while others were asked to record which options they would exclude at each stage. The choice options in Experiment 1 were 24 alternative automobile descriptions, while in Experiment 2 participants were presented with 32 different graduate schools. Consistent with the existence of separate criteria for inclusion and exclusion, significantly more options were retained prior to final choice (in Stages 1 and 2) under exclusion than under inclusion. This finding held both for options with and without missing information. Nevertheless, when we examined Stage 3 in each experiment, we found no systematic differences between the distribution of final choices in each condition. These results, along with supplemental data, support a theoretical account in which options about which the decision maker is unsure are retained under exclusion but not under inclusion. [ABSTRACT FROM AUTHOR]

Chance and luck are conceived as two distinct causal agents that effect different results. The present study examined the proposition that persons who habitually attribute the outcome of random events to chance (chance-oriented persons) and those who prefer to attribute such outcomes to luck (luck-oriented persons) cope differently with decision making under uncertainty. Chance-oriented persons decide according to given or estimated odds that define the decision problem. Luck-oriented persons, on the other hand, rely on self-attributions of personal luck, and ignore the probabilities of decision outcomes. The hypothesized qualitative difference between the approaches of chance- and luck-oriented persons to decision making under uncertainty was supported substantially by the findings. [ABSTRACT FROM AUTHOR]

Recent research has examined consumer decision making when the option of not choosing any of the alternatives is also provided. The findings from this research suggest that the decision to defer choice is sensitive to the uncertainty of choosing the most preferred option from the set of alternatives provided. Building on this research, the author tests whether the decision to defer choice is also influenced by task variables that influence decision uncertainty. In the first experiment, this proposition is tested for choice problems in which information on three relatively equally attractive alternatives is presented either sequentially or simultaneously. As predicted, the preference for the defer-choice option was greater when the three alternatives were presented simultaneously. A second study forced subjects into using one of four decision strategies in order to choose between two non-dominated alternatives. The preference for the no-choice option was found to be higher when the rule required explicit attribute tradeoffs and lower when it simplified choice. These results suggest that choice uncertainty is influenced by the decision strategy used to determine the preference among alternatives. We conclude with a discussion of the implications of the results for marketers' communication strategies. [ABSTRACT FROM AUTHOR]

Multiple scenario analysis is used by many organizations for long-term planning, in part because the development of more than one scenario of the future is thought to prevent overconfidence in any one specific forecast. The present study attempts to clarify some of the questions concerning the cognitive effects of scenario presentation by distinguishing between confidence and subjective uncertainty. It examined the impact of different types of scenario information on confidence ratings, credible intervals, and features of forecast series. Subjects (N = 186) read either one. two, or no scenario(s) describing potential changes in the level of a stimulus variable, then made forecasts of that variable over the next fifty years. Reading any type of scenario information increased confidence in forecasts; there was no reduction in confidence due to presentation of multiple conflicting scenarios, compared to presentation of only one scenario. Differences in number and in type of scenarios presented did. however, affect subjective uncertainty. [ABSTRACT FROM AUTHOR]

An experiment was conducted to investigate the effect of a priori probability of false alarms and time pressure on decision-making behaviour in a dynamic task environment. In order to assess whether strategy selection in a dynamic task environment would be adaptive, we modelled the task mathematically, and compared actual decision strategies to the optimal ones. In addition to the selected strategy, we also studied decision-making behaviour at a lower operational level, reflecting the amount of effort subjects are willing to spend on the decision process. Subjects were required to monitor the fitness level of a simulated athlete, who was running a race, and had to provide treatments whenever the athlete's fitness level suggested a real physiological problem. When a decline of the athlete's fitness was caused by a false alarm, a spontaneous recovery would occur after some time, without any need for intervention. Time pressure was manipulated by the rate at which the athlete's fitness level declined. Overall, subjects did not select the most efficient strategy: they dominantly selected information before applying an action, even though it would have been more profitable, and less effortful, just to apply actions. At the operational level, subjects appeared to invest less effort when the probability of false alarms increased and to invest more effort when time pressure increased. However, in contrast to the outcomes of our mathematical model, subjects adjusted the amount of intervention to the a priori probability of false alarms and not to time pressure. Together, the results indicate that the selection of a decision strategy in a dynamic task is less adaptive then is generally concluded from studies with static tasks. [ABSTRACT FROM AUTHOR]

Two experiments were performed to determine whether judgments of the relative chances of two independent events occurring are biased by constant outcome values contingent on the events when the uncertainties are specified by linguistic expressions (e.g. doubtful). In Experiment 1, subjects directly judged the relative chances of the two events, of which one was represented by a spinner and the other by a linguistic probability expression. In Experiment 2, only linguistic probability expressions were used to describe the two events and a betting procedure was used. A bias was evident in both studies, such that the relative judgments tended to favour the event with the positive rather than the negative contingent outcome. The bias was smaller for the low- than for the high-probability phrases. Individual differences were great, with the bias appearing strongly in only about one-third of the population. Theoretical implications of the present and related results are discussed. [ABSTRACT FROM AUTHOR]

Risky decisions are often difficult to make or defend because assessments of key facts are themselves subject lo uncertainty. Theory bearing on this second-order 'assessment uncertainty' (AU) has found little practical application. A methodology is proposed for representing AU in a form where it can be understood, judgmentally checked and effectively used in common decision situations, including some guidance on how to elicit or indirectly measure AU. It extends well-established personal probability logic, with primary focus on predicting shifts in first-order factual assessments which might result from new developments -- whether these are realistically possible or 'ideal.' The approach attempts to be prescriptive, in that its input can be readily measured, its output fits intended use and user, and the intervening procedures are logically sound without being too burdensome. Successful application is illustrated in the context of a regulatory decision on whether a reactor should be required to install a costly safety feature. [ABSTRACT FROM AUTHOR]