Sensitivity and Bias in Decision-Making under Risk: Evaluating the Perception of Reward, Its Probability and Value

Madeleine E Sharp, Jayalakshmi Viswanathan, Linda J Lanyon and Jason J S Barton

PLOS ONE, 2012, vol. 7, issue 4, 1-9

Abstract: Background: There are few clinical tools that assess decision-making under risk. Tests that characterize sensitivity and bias in decisions between prospects varying in magnitude and probability of gain may provide insights in conditions with anomalous reward-related behaviour. Objective: We designed a simple test of how subjects integrate information about the magnitude and the probability of reward, which can determine discriminative thresholds and choice bias in decisions under risk. Design/Methods: Twenty subjects were required to choose between two explicitly described prospects, one with higher probability but lower magnitude of reward than the other, with the difference in expected value between the two prospects varying from 3 to 23%. Results: Subjects showed a mean threshold sensitivity of 43% difference in expected value. Regarding choice bias, there was a ‘risk premium’ of 38%, indicating a tendency to choose higher probability over higher reward. An analysis using prospect theory showed that this risk premium is the predicted outcome of hypothesized non-linearities in the subjective perception of reward value and probability. Conclusions: This simple test provides a robust measure of discriminative value thresholds and biases in decisions under risk. Prospect theory can also make predictions about decisions when subjective perception of reward or probability is anomalous, as may occur in populations with dopaminergic or striatal dysfunction, such as Parkinson's disease and schizophrenia.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0033460

DOI: 10.1371/journal.pone.0033460

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