Do people exploit risk–reward structures to simplify information processing in risky choice?

Christina Leuker (), Thorsten Pachur, Ralph Hertwig and Timothy J. Pleskac
Additional contact information
Christina Leuker: Max Planck Institute for Human Development
Thorsten Pachur: Max Planck Institute for Human Development
Ralph Hertwig: Max Planck Institute for Human Development
Timothy J. Pleskac: Max Planck Institute for Human Development

Journal of the Economic Science Association, 2019, vol. 5, issue 1, No 7, 76-94

Abstract: Abstract The high rewards people desire are often unlikely. Here, we investigated whether decision-makers exploit such ecological correlations between risks and rewards to simplify their information processing. In a learning phase, participants were exposed to options in which risks and rewards were negatively correlated, positively correlated, or uncorrelated. In a subsequent risky choice task, where the emphasis was on making either a ‘fast’ or the ‘best’ possible choice, participants’ eye movements were tracked. The changes in the number, distribution, and direction of eye fixations in ‘fast’ trials did not differ between the risk–reward conditions. In ‘best’ trials, however, participants in the negatively correlated condition lowered their evidence threshold, responded faster, and deviated from expected value maximization more than in the other risk–reward conditions. The results underscore how conclusions about people’s cognitive processing in risky choice can depend on risk–reward structures, an often neglected environmental property.

Keywords: Risk–reward; Decisions under risk; Ecological rationality; Eye tracking; Drift-diffusion model (search for similar items in EconPapers)
JEL-codes: D81 D91 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s40881-019-00068-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jesaex:v:5:y:2019:i:1:d:10.1007_s40881-019-00068-y

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/40881

DOI: 10.1007/s40881-019-00068-y

Access Statistics for this article

Journal of the Economic Science Association is currently edited by Nikos Nikiforakis and Robert Slonim

More articles in Journal of the Economic Science Association from Springer, Economic Science Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().