Heuristic decision-making models, like Take-the-best, rely on environmental regularities. They conduct a limited search, and ignore available information, by assuming there is structure in the decision-making environment. Take-the-best relies on at least two regularities: diminishing returns, which says that information found earlier in search is more important than information found later; and correlated information, which says that information found early in search is predictive of information found later. We develop new approaches to determining search orders, and to measuring cue discriminability, that make the reliance of Take-the-best on these regularities clear, and open to manipulation. We then demonstrate, in the well-studied German cities environment, and three new city environments, when and how these regularities support Take-the-best. To do this, we focus not on the accuracy of Take-the-best, as most previous studies have, but on a measure of its coherence as a decision-making process. In particular, we consider whether Take-the-best decisions, based on a single piece of information, can be justified because an exhaustive search for information is unlikely to yield a different decision. Using this measure, we show that when the two environmental regularities are present, the decisions made by limited search are unlikely to have changed after exhaustive search, but that both regularities are often necessary.

Popular culture reflects whatever piques our imagination. Think of the myriad movies and books that take viewers and readers on an imaginary journey to the past or the future (e.g., Gladiator, The Time Machine). Despite the ubiquity of time travel as a theme in cultural expression, the factors that underlie people’s preferences concerning the direction of time travel have gone unexplored. What determines whether a person would prefer to visit the (certain) past or explore the (uncertain) future? We identified three factors that markedly affect people’s preference for (hypothetical) travel to the past or the future, respectively. Those who think of themselves as courageous, those with a more conservative worldview, and—perhaps counterintuitively—those who are advanced in age prefer to travel into the future. We discuss implications of these initial results.

Decision makers are often ambiguity averse, preferring options with subjectively known probabilities to options with unknown probabilities. The Ellsberg paradox is the best-known example of this phenomenon. Ambiguity has generally been studied in the domain of risky choice, and many theories of ambiguity aversion deal with ambiguity only in this context. However, ambiguity aversion may occur in other contexts. In the present experiment, we examine the effects of ambiguity in intertemporal choice. Subjects imagine they are expecting a package and must choose between two delivery options. Some delivery times are exact. Others are ambiguous, with delivery possible over a range of dates. This problem was structurally identical to the Ellsberg paradox. Subjects showed the same pattern of responses as in the traditional Ellsberg paradox, with each delivery service preferred when it was the unambiguous option. Ambiguity aversion is not specific to risk, but can also occur in other domains.

An intrapersonal externality exists when an individual’s decisions affect the outcomes of her future decisions. It can result in decreasing or increasing average returns to the rate of consumption, as occurs in addiction or exercise. Experimentation using the Harvard Game, which models intrapersonal externalities, has found differences in decision making between drug users and control subjects, leading to the argument that these externalities influence the course of illicit drug use. Nevertheless, it is unclear how participants who behave optimally conceptualise the problem. We report two experiments using a simplified Harvard Game, which tested the differences in contingency knowledge between participants who chose optimally and participants who did not. Those who demonstrated optimal performance exhibited both a pattern of correct responses and systematic errors to questions about the payoff schedules. The pattern suggested that they learned explicit knowledge of the change in reinforcement on a trail-by-trial basis. They did not have, or need, a full knowledge of the historical interaction leading to each payoff. We also found no evidence of choice differences between participants who were given a guaranteed payment and participants who were paid contingent on their performance, but those given a guaranteed payment were able to report more contingency knowledge as the experiment progressed, suggesting that they explored more rather than settling into a routine. Experiment 2 showed that using a fixed inter-trial interval did not change the results.

Individual true and error theory assumes that responses by the same person to the same choice problem within a block of trials are based on the same true preferences but may show preference reversals due to random error. Between blocks, a person’s true preferences may differ or stay the same. This theory is illustrated with studies testing two critical properties that distinguish models of risky decision making: (1) restricted branch independence, which is implied by original prospect theory and violated in a specific way by both cumulative prospect theory and the priority heuristic; and (2) stochastic dominance, which is implied by cumulative prospect theory. Corrected for random error, most individuals systematically violated stochastic dominance, ruling out cumulative prospect theory. Furthermore, most people violated restricted branch independence in the opposite way predicted by that theory and the priority heuristic. Both violations are consistent with the transfer of attention exchange model. No one was found whose data were compatible with cumulative prospect theory, except for those that were also compatible with expected utility, and no one satisfied the priority heuristic.

We employed simple gambles to investigate information processing in relation to the compatibility effect. Subjects should be more likely to engage in a deliberative thinking strategy when completing a pricing task rather than a rating task. We used eye-tracking methodology to measure information acquisition and processing in order to test the above hypothesis as well as to show that losses and alternatives with uncertain outcomes are more likely than gains and alternatives with sure outcomes to be processed through a deliberative thinking process. Results showed that pupil dilations, fixation duration and number of fixations increased when subjects evaluated the gambles with a pricing task. Additionally, the number of fixations increased as the gamble outcome became increasingly negative and when the outcome was uncertain (vs. sure). Fixations were also predictive of subjects’ final evaluations of the gambles. We discuss our results in light of the cognitive processes underlying different response modes in economic preferences.

Investors, like any decision maker, feel regret when they compare the outcome of an investment with what the outcome would have been had they invested differently. We argue and show that this counterfactual comparison process is most likely to take place when the decision maker’s expectations are violated. Across five scenario experiments we found that decision makers were influenced only by forgone investment outcomes when the realized investment fell short of the expected result. However, when their investments exceeded prior expectations, the effect of foregone investment on regret disappeared. In addition, Experiment 4 found that individual differences in the need to maximize further moderated the effects of their expectations, such that maximizers always take into account the forgone investment. The final experiment found that when probed to make counterfactual comparisons, also investments that exceed expectations may lead to regret. Together these experiments reveal insights into the comparative processes leading to decision regret.

Runs of gains and losses are particularly salient to decision makers because of their perceived departure from randomness, as well as their immediate impact on the financial status of the decision makers. Past research has focused on decision making biases that relate to faulty conceptions of chance and luck, such as the gambler’s fallacy and the hot hand effect. Participants in the current study bet on the outcomes of a long sequence of simulated coin tosses. Risk preferences were found to change as a function of run valence (i.e., losses vs. gains), run length, and financial status. Individuals were found to differ in the effect of all of these factors, in their responses to runs of gains and losses in sequential risky choice.

Research has identified loss aversion as a strong and robust phenomenon, but has also revealed some moderators affecting the magnitude of its effect on decision making. In the current article, we draw attention to the fact that even the measurement of loss aversion itself may affect its magnitude by inducing a focus on either losses or gains. In three studies, we provide empirical evidence for such a measurement-induced focus. In all studies we used coin-toss gambles—in which there is a 50/50 chance to win or to lose—to assess gain/loss ratios as a measure of loss aversion. Participants either filled out the loss side or the gain side of this gain/loss ratio. The studies consistently showed that—using within- and between-subject designs and anticipated and real coin-toss gambles—the strength of loss aversion depended on the measurement format (fill-in-the-loss versus fill-in-the-gain); filling in the loss side increased loss aversion. Moreover, loss aversion was more affected by the stakes of the gamble in the fill-in-the-loss format than in the fill-in-the-gain format.

We report a preliminary study that compared decisions made in an oxygen depleted environment with those made in a normoxic environment. Participants were presented with a series of choices that involved either losses or gains. For each choice they were forced to choose between a sure thing and a gamble of the same expected value. For choices involving losses, participants were more risk seeking in the oxygen depleted environment; for those involving gains, no difference was found.

Previous research has shown an association between emotions, particularly social emotions, and moral judgments. Some studies suggested an association between blunted emotion and the utilitarian moral judgments observed in patients with prefrontal lesions. In order to investigate how prefrontal brain damage affects moral judgment, we asked a sample of 29 TBI patients (12 females and 17 males) and 41 healthy participants (16 females and 25 males) to judge 22 hypothetical dilemmas split into three different categories (non-moral, impersonal and personal moral). The TBI group presented a higher proportion of affirmative (utilitarian) responses for personal moral dilemmas when compared to controls, suggesting an atypical pattern of utilitarian judgements. We also found a negative association between the performance on recognition of social emotions and the proportion of affirmative responses on personal moral dilemmas. These results suggested that the preference for utilitarian responses in this type of dilemmas is accompanied by difficulties in social emotion recognition. Overall, our findings suggest that deontological moral judgments are associated with normal social emotion processing and that frontal lobe plays an important role in both emotion and moral judgment.

A type of emergency decision-making which has not received research attention is the police search for a lost person in a rural or wilderness area. For many such incidents, decisions concerning where to search for the lost subject are made by a planning team, each member of which assigns probabilities to the various hypotheses about where the subject might be located, including the residual hypothesis that the subject is somewhere else entirely, that is, outside of the designated search area. In the current study, 32 adult males with search planning experience were asked to assign probabilities to a fictional lost person incident. It was hypothesized, according to support theory (Tversky & Koehler, 1994), that subjects who first considered the five possible scenarios accounting for how the subject could have left the search area—i.e., unpacked the residual hypothesis—would subsequently increase their probability estimate of the global hypothesis that the missing subject was not in the designated search area, compared to those subjects who unpacked the focal hypothesis. This hypothesis was confirmed. We also found considerable evidence for subadditivity, as most subjects estimated higher summed probabilities for the individual scenarios accounting for the focal and residual hypotheses, respectively. The potential negative consequences of such unpacking effects during a lost person incident were discussed, and possible means of mitigating such effects were described.

Most prior research on the compromise effect has focused on single rather than multiple choices. This research investigates the potential effects of purchase quantity on the compromise effect. We propose that the share of the middle option in a trinary choice set decreases as the purchase quantity increases, because people tend to employ a balance heuristic to distribute their multiple choices among the available options to achieve a balanced state and to satisfy their variety-seeking tendency. Furthermore, we propose that the need for justification and an optimal stimulation level moderate the relationship between the number of purchase items and the compromise effect. These proposed hypotheses are supported by results from three experiments.

Dynamic, connectionist models of decision making, such as decision field theory (Roe, Busemeyer, & Townsend, 2001), propose that the effect of context on choice arises from a series of pairwise comparisons between attributes of alternatives across time. As such, they predict that limiting the amount of time to make a decision should decrease rather than increase the size of contextual effects. This prediction was tested across four levels of time pressure on both the asymmetric dominance (Huber, Payne, & Puto, 1982) and compromise (Simonson, 1989) decoy effects in choice. Overall, results supported this prediction, with both types of decoy effects found to be larger as time pressure decreased.