Skip to main content
×
×
Home

New Paradigms for the Old Question: Challenging the Expectation Rule Held by Risky Decision-Making Theories

  • Lei Zhou (a1) (a2) (a3), Yang-Yang Zhang (a2) (a3) (a4), Shu Li (a1) (a2) (a3) and Zhu-Yuan Liang (a2) (a3)
Abstract

In risky decision making, whether decision makers follow an expectation rule as hypothesised by mainstream theories is a compelling question. To tackle this question and enrich our knowledge of the underlying mechanism of risky decision making, we developed a series of new experimental paradigms that directly examined the computation processes to systematically investigate the process of risky decision making and explore the boundary condition of expectation rule over the course of a decade. In this article, we introduce these methods and review behavioural, eye-tracking, event-related potential, and functional magnetic resonance imaging studies that employed these methods. Results of these studies consistently showed that decision makers in the single-application condition did not perform the weighting and summing process assumed by the expectation rule. Moreover, decision makers were inclined to adopt a non-compensatory strategy, such as a heuristic one, in risky decision making. Furthermore, results indicated that the expectation rule was only applicable for conditions that involved decisions applied to numerous events (multiple applications) or to people (everyone). The findings indicated that using an index based on expected value to prescribe human risk preferences appears to be an artificial or false index of risk preference, and emphasised a new methodological direction for risky decision-making research.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      New Paradigms for the Old Question: Challenging the Expectation Rule Held by Risky Decision-Making Theories
      Available formats
      ×
      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      New Paradigms for the Old Question: Challenging the Expectation Rule Held by Risky Decision-Making Theories
      Available formats
      ×
      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      New Paradigms for the Old Question: Challenging the Expectation Rule Held by Risky Decision-Making Theories
      Available formats
      ×
Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Corresponding author
Address for correspondence: Drs Shu Li or Zhu-Yuan Liang, Institute of Psychology, Chinese Academy of Sciences, Beijing 100101, China. E-mail: lishu@psych.ac.cn; liangzy@psych.ac.cn
References
Hide All
Aslam, N., & Tariq, N. (2010). Trauma, depression, anxiety and stress among individuals living in earthquake affected and unaffected areas. Pakistan Journal of Psychological Research, 25, 131148.
Baron, J. (2008). Foreword. In Baron, J., 思维与决策 (第四版) [Thinking and deciding (4th ed.)] (Li, S. & Liang, Z.-Y., Trans.) (pp. Ⅴ). Beijing, China: China Light Industry Press.
Baron, J. (2016). Foreword. In Li, S., 决策心理齐当别之道. [Equate-to-differentiate way of decision-making] (p. 4). Shanghai, China: East China Normal University Press.
Böckenholt, U., & Hynan, L.S. (1994). Caveats on a process-tracing measure and a remedy. Journal of Behavioral Decision Making, 7, 103117.
Brandstätter, E., Gigerenzer, G., & Hertwig, R. (2006). The priority heuristic: Making choices without trade-offs. Psychological Review, 113, 409432.
Brandstätter, E., & Gussmack, M. (2012). The cognitive processes underlying risky choice. Journal of Behavioral Decision Making, 26, 185197.
Busse, C., Kach, A.P., & Wagner, S.M. (2017). Boundary conditions: What they are, how to explore them, why we need them, and when to consider them. Organizational Research Methods, 20, 574609.
Colbert, G., Murray, D., & Nieschwietz, R. (2009). The use of expected value in pricing judgments. Journal of Risk Research, 12, 199208.
DeKay, M.L., Hershey, J.C., Spranca, M.D., Ubel, P.A., & Asch, D.A. (2006). Are medical treatments for individuals and groups like single-play and multiple-play gambles? Judgment and Decision Making, 1, 134145.
Dshemuchadse, M., Scherbaum, S., & Goschke, T. (2013). How decisions emerge: Action dynamics in intertemporal decision making. Journal of Experimental Psychology: General, 142, 93100.
Fennema, H., & Wakker, P. (1997). Original and cumulative prospect theory: A discussion of empirical differences. Journal of Behavioral Decision Making, 10, 5364.
Fennema, H., & Wakker, P. (1994). An explanation and characterization for the buying of lotteries. In Sixto, R. (Ed.), Decision theory and decision analysis: Trends and challenges (pp. 163175). Netherlands: Springer.
Gbadamosi, J., & Zangemeister, W.H. (2001). Visual imagery in hemianopic patients. Journal of Cognitive Neuroscience, 13, 855866.
Gigerenzer, G., Hertwig, R., & Pachur, T. (2011). Heuristics: The foundations of adaptive behavior. New York, NY: Oxford University Press.
Glöckner, A., & Herbold, A.K. (2011). An eye‐tracking study on information processing in risky decisions: Evidence for compensatory strategies based on automatic processes. Journal of Behavioral Decision Making, 24, 7198.
Grant, S., & Kajii, A. (1998). AUSI expected utility: An anticipated utility theory of relative disappointment aversion. Journal of Economic Behavior & Organization, 37, 277290.
Hechanova, M.R.M., Waelde, L.C., & Ramos, P.A.P. (2016). Evaluation of a group-based resilience intervention for typhoon haiyan survivors. Journal of Pacific Rim Psychology, 10, e12.
Hogarth, R.M. (1987). Judgement and choice: The psychology of decision. New York, NY: Wiley.
Johnson, E.J., Schulte-Mecklenbeck, M., & Willemsen, M.C. (2008). Process models deserve process data: Comment on Brandstätter, Gigerenzer, and Hertwig (2006). Psychological Review, 115, 263273.
Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47, 263291.
Keren, G. (1991). Additional tests of utility theory under unique and repeated conditions. Journal of Behavioral Decision Making, 4, 297304.
Klos, A., Weber, E.U., & Weber, M. (2005). Investment decisions and time horizon: Risk perception and risk behavior in repeated gambles. Management Science, 51, 17771790.
Langer, T., & Weber, M. (2001). Prospect theory, mental accounting, and differences in aggregated and segregated evaluation of lottery portfolios. Management Science, 47, 716733.
Li, S. (1993). What is wrong with Allais’ certainty effect? Journal of Behavioral Decision Making, 6, 271281.
Li, S. (1994a). What is the role of transparency in cancellation? Organizational Behavior and Human Decision Processes, 60, 353366.
Li, S. (1994b). Is there a problem with preference reversals? Psychological Reports, 74, 675679.
Li, S. (1995). Is there a decision weight π? Journal of Economic Behavior and Organization, 27, 453463.
Li, S. (1998). Can the conditions governing the framing effect be determined? Journal of Economic Psychology, 19, 133153.
Li, S. (2001). 艾勒悖论: 另释 [Allais paradox: A behavioral explanation]. Acta Psychologica Sinica, 33, 176181
Li, S. (2003). The role of expected value illustrated in decision-making under risk: Single-play vs. multiple-play. Journal of Risk Research, 6, 113124.
Li, S. (2004). A behavioral choice model when computational ability matters. Applied Intelligence, 20, 147163.
Li, S. (2004). Equate-to-differentiate approach: An application in binary choice under uncertainty. Central European Journal of Operations Research, 12, 269294.
Li, S. (2006). Preference reversal: A new look at an old problem. Psychological Record, 56, 411428.
Li, S. (2016). 决策心理齐当别之道. [An equate-to-differentiate way of decision-making]. Shanghai, China: East China Normal University Press.
Li, S., & Adams, A.S. (1995). Is there something more important behind framing? Organizational Behavior and Human Decision Processes, 62, 216219.
Li, S., & Taplin, J.E. (2002). Examining whether there is a disjunction effect in prisoner's dilemma games. Chinese Journal of Psychology, 44, 2546.
Li, S., Taplin, J.E., & Zhang, Y. (2007). The equate-to-differentiate's way of seeing the prisoner's dilemma. Information Sciences, 177, 13951412.
Li, S., & Xie, X. (2006). A new look at the ‘Asian disease’ problem: A choice between the best possible outcomes or between the worst possible outcomes? Thinking and Reasoning, 12, 129143.
Li, X., Logan, G.D., & Zbrodoff, N.J. (2010). Where do we look when we count? The role of eye movements in enumeration. Attention, Perception, & Psychophysics, 72, 409426.
Liang, Z.-Y., Xu, L.-J., Rao, L.-L., Jiang, T.-Z., & Li, S. (2012). ‘20%的概率获得蛋糕’=‘获得蛋糕的20%’检验风险决策的期望法则假设’ [‘20% probability to gain a cake’ = ‘gain 20% of the cake’? Testing the expectation rule of risky decision making]. Chinese Science Bulletin, 57, 34213433.
Liu, H.-Z., Li, X., Li, S., & Rao, L.-L. (2017). When expectation theories work or do not work: An eye-tracking study of discrepancy between everyone and every one. Manuscript submitted for publication.
Nalipay, M.J.N., & Mordeno, I.G. (2016). Emotional intensity of trauma memory as moderator of the relationship between posttraumatic cognitions and PTSD symptoms. Journal of Pacific Rim Psychology, 10, e7.
Noton, D., & Stark, L. (1971). Scanpaths in eye movements during pattern perception. Science, 171, 308311.
Pachur, T., Hertwig, R., Gigerenzer, G., & Brandstätter, E. (2013). Testing process predictions of models of risky choice: A quantitative model comparison approach. Frontiers in Psychology, 4, 646.
Paton, D. (2009). Living on the ring of fire: Perspectives on managing natural hazard risk in pacific rim countries. Journal of Pacific Rim Psychology, 3, 13.
Paton, D., Houghton, B.F., Gregg, C.E., McIvor, D., Johnston, D.M., Bürgelt, P., . . . Horan, J. (2009). Managing tsunami risk: Social context influences on preparedness. Journal of Pacific Rim Psychology, 3, 2737.
Quiggin, J. (1982). A theory of anticipated utility. Journal of Economic Behaviour & Organizations, 3, 323343.
Rao, L.-L., Li, S., Jiang, T., & Zhou, Y. (2012). Is payoff necessarily weighted by probability when making a risky choice? Evidence from functional connectivity analysis. PLoS One, 7, e41048.
Rao, L.-L., Liang, Z.-Y., Li, S. (2009). 迫选规则体验法: 检验规范性和描述性风险决策理论的新尝试 [The experiencing of imposed rule: A new attempt to test both normative and descriptive decision theories]. Acta Psychologica Sinica, 41, 726736.
Rao, L.-L., Liu, X.-N., Li, Q., Zhou, Y., Liang, Z.-Y., Sun, H.-Y., . . . Li, S. (2013). Toward a mental arithmetic process in risky choices. Brain and Cognition, 83, 307314.
Rao, L.-L., Zhou, Y., Xu, L., Liang, Z.-Y., Jiang, T., & Li, S. (2011). Are risky choices actually guided by a compensatory process? New insights from fMRI. PLoS One, 6, e14756.
Redelmeier, D.A., & Tversky, A. (1992). On the framing of multiple prospects. Psychological Science, 3, 191193.
Sagala, S., Okada, N., & Paton, D. (2009). Predictors of intention to prepare for volcanic risks in Mt Merapi, Indonesia. Journal of Pacific Rim Psychology, 3, 4754.
Scarpa, R., Zanoli, R., Bruschi, V., & Naspetti, S. (2013). Inferred and stated attribute non-attendance in food choice experiments. American Journal of Agricultural Economics, 95, 165180.
Schulte-Mecklenbeck, M., Kühberger, A., & Ranyard, R. (2010). A handbook of process tracing methods for decision research: A critical review and user's guide. New York, NY: Taylor & Francis.
Schulte-Mecklenbeck, M., Kühberger, A., Gagl, B., & Hutzler, F. (2017). Inducing cognitive processes: Bringing process measures and cognitive processes closer together. Journal of Behavioral Decision Making, 30, 10011013.
Seiuli, B.M.S., Nikora, L.W., Te Awekotuku, N., & Hodgetts, D. (2016). Fia ola: Grief recovery following a tsunami disaster in Samoa. Journal of Pacific Rim Psychology, 10, e5.
Su, Y., Rao, L.-L., Sun, H.-Y., Du, X.-L., Li, X., & Li, S. (2013). Is making a risky choice based on a weighting and adding process? An eye-tracking investigation. Journal of Experimental Psychology: Learning, Memory, and Cognition, 3, 17651780.
Sun, H.-Y., Rao, L.-L., Zhou, K., & Li, S. (2013). Formulationg an emergency plan based on expectation-maximization is one thing, but applying it to a single case is another. Journal of Risk Research, 17, 785814.
Sun, Y., Li, S., Bonini, N., & Su, Y. (2012). Graph framing effects in decision making. Journal of Behavioral Decision Making, 25, 491501.
Takemura, K. (1994). Framing kouka no rironteki setumei: Risk ka ni okeru ishikettei no jyokyou-izonteki-syouten-model [Theoretical explanation of framing effect: Contingent focus model of decision framing]. Japanese Psychological Review, 37, 270291.
Takemura, K., & Fujii, S. (1999). Contingent focus model of decision framing under risk. Technical Report, 67, 5167.
Thorngate, W. (1980). Efficient decision heuristics. Behavioral Science, 25, 219225.
Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211, 453458.
Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty, 5, 297323.
Underwood, G., Humphrey, K., & Foulsham, T. (2008). Knowledge-based patterns of remembering: Eye movement scanpaths reflect domain experience. HCI and Usability for Education and Work, 5298, 125144.
Wang, Z.-J., & Li, S. (2012). 对整合模型和占优启发式模型的检验基于信息加工过程的眼动研究证据 [Tests of the integrative model and priority heuristic model from the point of view of choice process: Evidence from an eye-tracking study]. Acta Psychologica Sinica, 44, 179198.
Weber, E.U., Hsee, C.K., & Sokolowska, J. (1998). What folklore tells us about risk and risk taking: Cross-cultural comparisons of American, Chinese and German proverbs. Organizational Behavior and Human Decision Processes, 75, 170186.
Wedell, D.H., & Böckenholt, U. (1994). Contemplating single versus multiple encounters of a risky prospect. American Journal of Psychology, 107, 499518.
Zhou, L., Zhang, Y.Y., Wang, Z.J., Rao, L.L., Wang, W., Li, S., . . . Liang, Z.Y. (2016). A scanpath analysis of the risky decision-making process. Journal of Behavioral Decision Making, 29, 169182.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Pacific Rim Psychology
  • ISSN: -
  • EISSN: 1834-4909
  • URL: /core/journals/journal-of-pacific-rim-psychology
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 30
Total number of PDF views: 186 *
Loading metrics...

Abstract views

Total abstract views: 348 *
Loading metrics...

* Views captured on Cambridge Core between 26th March 2018 - 25th June 2018. This data will be updated every 24 hours.