Frequent winners explain apparent skewness preferences in experience-based decisions.

Do people's attitudes toward the (a)symmetry of an outcome distribution affect their choices? Financial investors seek return distributions with frequent small returns but few large ones, consistent with leading models of choice in economics and finance that assume right-skewed preferences. In contrast, many experiments in which decision-makers learn about choice options through experience find the opposite choice tendency, in favor of left-skewed options. To reconcile these seemingly contradicting findings, the present work investigates the effect of skewness on choices in experience-based decisions. Across seven studies, we show that apparent preferences for left-skewed outcome distributions are a consequence of those distributions having a higher value in most direct outcome comparisons, a "frequent-winner effect." By manipulating which option is the frequent winner, we show that choice tendencies for frequent winners can be obtained even with identical outcome distributions. Moreover, systematic choice tendencies in favor of right- or left-skewed options can be obtained by manipulating which option is experienced as the frequent winner. We also find evidence for an intrinsic preference for right-skewed outcome distributions. The frequent-winner phenomenon is robust to variations in outcome distributions and experimental paradigms. These findings are confirmed by computational analyses in which a reinforcement-learning model capturing frequent winning and intrinsic skewness preferences provides the best account of the data. Our work reconciles conflicting findings of aggregated behavior in financial markets and experiments and highlights the need for theories of decision-making sensitive to joint outcome distributions of the available options.

Posterior parietal cortex is causally involved in reward valuation but not in probability weighting during risky choice.

This study provides evidence that the posterior parietal cortex is causally involved in risky decision making via the processing of reward values but not reward probabilities. In the within-group experimental design, participants performed a binary lottery choice task following transcranial magnetic stimulation of the right posterior parietal cortex, left posterior parietal cortex, and a right posterior parietal cortex sham (placebo) stimulation. The continuous theta-burst stimulation protocol supposedly downregulating the cortical excitability was used. Both, mean-variance and the prospect theory approach to risky choice showed that the posterior parietal cortex stimulation shifted participants toward greater risk aversion compared with sham. On the behavioral level, after the posterior parietal cortex stimulation, the likelihood of choosing a safer option became more sensitive to the difference in standard deviations between lotteries, compared with sham, indicating greater risk avoidance within the mean-variance framework. We also estimated the shift in prospect theory parameters of risk preferences after posterior parietal cortex stimulation. The hierarchical Bayesian approach showed moderate evidence for a credible change in risk aversion parameter toward lower marginal reward value (and, hence, lower risk tolerance), while no credible change in probability weighting was observed. In addition, we observed anecdotal evidence for a credible increase in the consistency of responses after the left posterior parietal cortex stimulation compared with sham.

Association of internet gaming disorder with impulsivity: role of risk preferences.

BACKGROUND: Internet gaming disorder (IGD) is a formal mental disorder leading to personal and social impairment. Although it shares similar physical and psychosocial effects to substance use disorder, the psychological mechanisms underlying IGD remain unclear, although several researches have made significant contributions to its understanding. This study aims to elucidate the correlation between IGD, impulsive personality and risk preference of medical college students in China, from a questionnaire-based investigation. METHODS: Based on the cluster random sampling method, a questionnaire survey was conducted among medical college students in Northern Anhui, China from September 3 to October 27, 2020. The questionnaires included the Internet Gaming Disorder Scale (IGD-20), Chinese revised of Barratt Impulsiveness Scale Version 11 (BIS-11), and risk appetite index (RPI). Perform independent sample t-tests, analysis of variance (ANOVA), correlation analysis, and moderating effect analysis using SPSS 23.0. P < 0. 05 is considered statistically significant. RESULTS: 624 participants completed the survey, including 257 males (41.19%) and 367 females (58.81%). All participants were between 18 and 24 years. We found that in IGD and its six different dimensions and RPI, males scored significantly higher than females. Additionally, our finding revealed there is statistical significance in IGD and impulsiveness between gaming group with game time greater than or equal to 4 h and non-gaming group. The IGD and its six different dimensions, among which all except for mood modification are positively correlated with impulsiveness and RPI. Mediating effects indicate that RPI plays a partial mediating role between motor impulsiveness and IGD. CONCLUSION: The findings shows that there is a certain relationship between impulsivity and RPI, as well as IGD and its dimensions. RPI may be a mediator between impulsivity and IGD, and men have higher IGD. The findings supported the compensatory hypothesis. These findings may contribute to further research and development of intervention and prevention measures for IGD.

Anti-social behaviour and economic decision-making: Panel experimental evidence in the wake of COVID-19.

We systematically examine the acute impact of exposure to a public health crisis on anti-social behaviour and economic decision-making using unique experimental panel data from China, collected just before the outbreak of COVID-19 and immediately after the first wave was overcome. Exploiting plausibly exogenous geographical variation in virus exposure coupled with a dataset of longitudinal experiments, we show that participants who were more intensely exposed to the virus outbreak became more anti-social than those with lower exposure, while other aspects of economic and social preferences remain largely stable. The finding is robust to multiple hypothesis testing and a similar, yet less pronounced pattern emerges when using alternative measures of virus exposure, reflecting societal concern and sentiment, constructed using social media data. The anti-social response is particularly pronounced for individuals who experienced an increase in depression or negative affect, which highlights the important role of psychological health as a potential mechanism through which the virus outbreak affected behaviour.

Evolution of Risk Aversion over Five Years after a Major Natural Disaster.

The impact of exposure to a major unanticipated natural disaster on the evolution of survivors' attitudes toward risk is examined, exploiting plausibly exogenous variation in exposure to the 2004 Indian Ocean tsunami in combination with rich population-representative longitudinal survey data spanning the five years after the tsunami. Respondents chose among pairs of hypothetical income streams. Those directly exposed to the tsunami made choices consistent with greater willingness to take on risk relative to those not directly exposed to the tsunami. These differences are short-lived: starting a year later, there is no evidence of differences in willingness to take on risk between the two groups. These conclusions hold for tsunami-related exposures measured at the individual and community level. Apparently, tsunami survivors were inclined to assume greater financial risk in the short-term while rebuilding their lives after the disaster.

Local slow-wave activity over the right prefrontal cortex reveals individual risk preferences.

In everyday life, we have to make decisions under varying degrees of risk. Even though previous research has shown that the manipulation of sleep affects risky decision-making, it remains unknown whether individual, temporally stable neural sleep characteristics relate to individual differences in risk preferences. Here, we collected sleep data under normal conditions in fifty-four healthy adults using a portable high-density EEG at participants' home. Whole-brain corrected for multiple testing, we found that lower slow-wave activity (SWA, an indicator of sleep depth) in a cluster of electrodes over the right prefrontal cortex (PFC) is associated with higher individual risk propensity. Importantly, the association between local sleep depth and risk preferences remained significant when controlling for total sleep time and for time spent in deep sleep, i.e., sleep stages N2 and N3. Moreover, the association between risk preferences and SWA over the right PFC was very similar in all sleep cycles. Because the right PFC plays a central role in cognitive control functions, we speculate that local sleep depth in this area, as reflected by SWA, might serve as a dispositional indicator of self-regulatory ability, which in turn reflects risk preferences.

Developmental risk sensitivity theory: the effects of socio-economic status on children's risky gain and loss decisions.

Evolutionary developmental theories propose that early environments shape human risk preferences. Developmental risk sensitivity theory (D-RST) focuses on the plasticity of risk preferences during childhood and makes predictions about the effect of reward size based on a child's social environment. By contrast, prospect theory predicts risk aversion for gains and risk seeking for losses regardless of environment or status. We presented 4 to 10-year-olds (n = 194) with a set of trials in which they chose between a certain amount and a chance to receive more or nothing. Two trials were equal expected value choices that differed by stake size and two were unequal expected value choices. Children either received gain trials or loss trials. Social environment was assessed using socio-economic status (SES) and subjective social status. Results confirmed the predictions of D-RST for gains based on SES. Children from lower-SES families differentiated between the high- and low-value trials and made more risky decisions for the high-value reward compared with higher-SES children. Children from higher-SES families were more risk averse for both trial types. Decisions for loss trials did not conform completely to either theory. We discuss the results in relation to evolutionary developmental theories.

HIV, risk, and time preferences: Evidence from a general population sample in Lesotho.

Identifying individuals most at risk of HIV infection is a priority for policymakers. Apart from specific groups, however, little is known about how to identify those at high risk in the population. Research suggests that attitudes toward risk and time preferences may influence risky sexual behavior, but no studies have so far investigated the interplay between risk attitudes, time preference, and HIV infection. We collect data on risk and time preferences using hypothetical games (multiple price list method) at baseline and data on HIV status at baseline (2010) and endline (2012) allowing us to calculate incidence rate over a 2-year period among 675 participants, males and females 18-32 years old in Lesotho. We find robust evidence of a statistically significant positive associations between HIV incidence and prevalence and risk-loving attitudes, while the associations with risky behaviors and time preferences are not statistically significant. A measure of attitude toward risk, relatively easy to administer to individuals in a survey, is thus associated with future HIV status. This is an important finding for policymakers and suggests the importance of targeting HIV prevention programs to risk-loving individuals and therefore improving program efficiency.

Cultural Orientation and Risk Perception: Development of a Scale Operating in a French Context.

Cultural theory has often been invoked to explain risk preferences, yet empirical evidence for that influence has regularly been challenged. This research addresses this issue by reassessing the role of cultural orientation in understanding risk perception through the development of an alternative assessment tool of worldviews operating in a French context. Using data from two samples of French citizens (N = 192 and N = 631), study 1 conducted exploratory and confirmatory factor analyses which provided support for a three-factor scale of worldviews: hierarchy-individualism, egalitarianism, and fatalism. Based on data from two other independent samples (N = 111 and N = 422), study 2 affirmed, for each worldview, its convergent validity (with its counterpart in another worldview measure), discriminant validity (from all other subscales), and predictive validity (for specific patterns of risk perception). Of particular interest is that culturally diverse individuals hold divergent positions on risk (skepticism, sensibility, neutrality) depending on, and in proportion to, the (in)compatibility of the hazardous activity to their preferred worldview. Implications for risk management and communication are discussed.

On the stability of risk preferences: Measurement matters.

We exploit the unique design of a repeated survey experiment among students in four countries to explore the stability of risk preferences in the context of the COVID-19 pandemic. Relative to a baseline before the pandemic, we find that self-assessed willingness to take risks decreased while the willingness to take risks in an incentivized lottery task increased, for the same sample of respondents. These findings suggest domain specificity of preferences that is partly reflected in the different measures.

Risk-Risk Tradeoffs for Mass Shootings and International Terrorism.

This article elicits information about risk perceptions and risk-risk tradeoffs for mass shootings and international terrorist attacks. These prominent public risks are similar in many respects in that both involve traumatic injuries. One might expect that the risk-risk tradeoff rate would be 1.0 unless other attributes of these risks are pertinent. Estimates based on an original survey structured to test rates of tradeoff between deaths from these risks indicate that respondents consistently place a premium on reducing mass shooting risks, as compared to risks of international terrorism. The average premium is relatively stable even after accounting for the effect of differences in personal risk beliefs on policy preferences. The estimated rates of risk-risk tradeoff reflect a greater weight on mass shooting risks even for those who believe that international terrorism risks pose a greater personal threat.

How the onset of the Covid-19 pandemic impacted pro-social behaviour and individual preferences: Experimental evidence from China.

We present experimental evidence on how pro-sociality, trust and attitudes towards risk and ambiguity evolved over the six weeks following the imposition of stringent Covid-19 related lockdown measures in the Hubei province of China. We compare incentivized economic decision-making in a baseline sample, collected pre-epidemic, with a series of repeated cross-sectional samples drawn from the same population between January and March, 2020. We find high rates of altruism, cooperation and aversion to risk taking under ambiguity in the immediate aftermath of the lockdown, while trust is significantly below its baseline level. Risk attitudes also differ in the post-lockdown sample, with decreased risk tolerance in the loss domain and lesser risk aversion in the gain domain. We further uncover significant transitory effects for trust and risk aversion around the date of a high-profile whistleblower's death from Covid-19. Our findings suggest that the onset of a public health crisis may have unintended consequences for economic preferences that determine population compliance with interventions designed to reduce the spread of a novel coronavirus.

Adolescent Time and Risk Preferences: Measurement, Determinants and Field Consequences.

We use experimental and survey measures to evaluate the time and risk preferences of nearly 500 adolescents aged 16-19 years old. We find that survey questions about time and risk preferences are weakly correlated with corresponding experiments in which participants trade-off monetary rewards. We find potentially substantial inter-generational transfer of time and risk preferences: parent time and risk preferences are strongly predictive of adolescent preferences for both survey and experimental measures. There are also interesting heterogeneities: girls are less risk seeking and more patient than boys when risk and time preferences are measured via surveys. Interestingly, the survey measures have more predictive power for field outcomes than the experimental measures. Higher patience as measured by the survey is significantly associated with lower body mass index (BMI), less time spent on sedentary activities, more time spent on physical activity and lower consumption of fast food and sweets.

Voluntary private health insurance demand determinants and risk preferences: Evidence from SHARE.

The demand for voluntary private health insurance (VPHI) in universal coverage health systems in Europe raises some questions. The aim of this paper is to determine the factors that explain the decision to purchase VPHI, to analyse the role of individual risk attitudes and self-assessed health (SAH) in purchasing VPHI, to explore the factors that explain individual risk preferences, and to test how SAH relates to those preferences. To achieve this aim, two recursive simultaneous probits are estimated using data collected by SHARE, wave 6. The main results indicate that people who are more satisfied with the health system coverage are more likely to buy VPHI; SAH is negative correlated with VPHI, but being a risk taker contributes to that decision; however, being a risk taker is positively influenced by good health status. This paper contributes to the discussion on the role of SAH and risk preferences in the decision to buy VPHI. It brings new insights for the health insurance companies and for health policy makers. HIGHLIGHTS: People who are more satisfied with the health system coverage are more likely to buy voluntary private health insurance. The longer the planning horizon assumed by individuals, the greater the likelihood they are risk takers. People reporting being risk takers are more likely to have taken out voluntary private health insurance. Self-assessed health influences the decision to buy voluntary private health insurance in two ways: a direct one, where better health lowers the odds of having insurance, and an indirect one through risk taking, which increases the odds of having insurance. Contributions of this work are mainly for health policy makers and insurance companies.

Risk Preferences of Children and Adolescents in Relation to Gender, Cognitive Skills, Soft Skills, and Executive Functions.

We conduct experiments eliciting risk preferences with over 1,400 children and adolescents aged 3-15 years old. We complement our data with an assessment of cognitive and executive function skills. First, we find that adolescent girls display significantly greater risk aversion than adolescent boys. This pattern is not observed among young children, suggesting that the gender gap in risk preferences emerges in early adolescence. Second, we find that at all ages in our study, cognitive skills (specifically math ability) are positively associated with risk taking. Executive functions among children, and soft skills among adolescents, are negatively associated with risk taking. Third, we find that greater risk-tolerance is associated with higher likelihood of disciplinary referrals, which provides evidence that our task is equipped to measure a relevant behavioral outcome. For academics, our research provides a deeper understanding of the developmental origins of risk preferences and highlights the important role of cognitive and executive function skills to better understand the association between risk preferences and cognitive abilities over the studied age range.

Why are Women More Religious than Men? Do Risk Preferences and Genetic Risk Predispositions Explain the Gender Gap?

Risk preference theory argues that the gender gap in religiosity is caused by greater female risk aversion. Although widely debated, risk preference theory has been inadequately tested. Our study tests the theory directly with phenotypic and genetic risk preferences in three dimensions-general, impulsive, and sensation-seeking risk. Moreover, we examine whether the effect of different dimension of risk preference on the gender gap varies across different dimensions of religiosity. We find that general and impulsive risk preferences do not explain gender differences in religiosity, whereas sensation-seeking risk preference makes the gender gap in self-assessed religiousness and church attendance insignificant, but not belief in God, prayer, or importance of religion. Genetic risk preferences do not remove any of the gender gaps in religiosity, suggesting that the causal order is not from risk preference to religiosity. Evidence suggests that risk preferences are not a strong predictor for gender differences in religiosity.

Patient Preferences for Endometriosis Pain Treatments in the United States.

OBJECTIVES: To quantify patient preferences for endometriosis-associated pain treatments and risk tolerance in exchange for pain reduction and to explore whether preferences vary on the basis of patient characteristics. METHODS: US women with a self-reported physician diagnosis of endometriosis and moderate to severe dysmenorrhea and nonmenstrual pelvic pain (NMPP) completed an online discrete choice experiment survey. Each choice question had a pair of hypothetical treatments characterized by attributes with varying levels: improvements in severe dysmenorrhea, severe NMPP, and severe dyspareunia; mode of administration; and treatment-related risks of pregnancy-related problems, bone fracture later in life, and moderate to severe hot flashes. A random-parameters logit model was used to quantify preferences and the attributes' conditional relative importance. RESULTS: A total of 250 women (mean age 34 years) completed the survey. The conditional relative importance of attributes was 3.66 for risk of moderate to severe hot flashes among respondents with and 3.58 among respondents without experience with moderate to severe hot flashes; 1.70, 1.49, and 1.48 for improvements in dyspareunia, NMPP, and dysmenorrhea, respectively; 0.60 for risk of pregnancy-related problems; 0.53 for mode of administration; and 0.49 for bone fracture risk. Preference weights for bone fracture risk levels were not statistically significantly different. In exchange for a greater improvement in dysmenorrhea from severe to mild (vs moderate), respondents without a history of hot flashes accepted a greater increase in the risk of moderate to severe hot flashes (38%) than did respondents with this history (16%). CONCLUSIONS: Respondents placed the greatest weight on risk of hot flashes, followed by improvements in dyspareunia, NMPP, dysmenorrhea. Bone fracture risk did not drive preferences.

Determinants of Probability Neglect and Risk Attitudes for Disaster Risk: An Online Experimental Study of Flood Insurance Demand among Homeowners.

Little is known about why individuals place either a high or a very low value on mitigating risks of disaster-type events, like floods. This study uses panel data methods to explore the psychological factors affecting probability neglect of flood risk relevant to the zero end-point of the probability weighting function in Prospect Theory, and willingness-to-pay for flood insurance. In particular, we focus on explanatory variables of anticipatory and anticipated emotions, as well as the threshold of concern. Moreover, results obtained under real and hypothetical incentives are compared in an experiment with high experimental outcomes. Based on our findings, we suggest several policy recommendations to overcome individual decision processes, which may hinder flood protection efforts.

Association between time preference, present-bias and physical activity: implications for designing behavior change interventions.

BACKGROUND: The decision to initiate or maintain a healthy habit, such as physical activity involves a trade-off between a short-term cost, such as time and effort, which are commonly identified as barriers to physical activity, and a long-term health benefit. Research suggests that individual time preference may be associated with unhealthy behaviors. However, empirical evidence of this for physical activity is scant. This study investigated the relationship between time preference and physical activity, and how this might influence behavior change. METHODS: Employees (n = 176; mean age 42.2 years) who participated in a physical activity intervention were invited to take part in a behavioral economic field experiment. Two economic experiments, using multiple price lists and monetary trade-off tables involving real money choices, were conducted face-to-face with participants to measure the two components of time preference, namely present-bias and discount rate. Together with individual risk preferences, these three variables were jointly estimated by maximum likelihood. These three parameters were expressed as a linear function of the levels of physical activity while controlling for socio-demographic variables within the same maximum likelihood framework. RESULTS: Those who were present-biased and who had higher discount rates did significantly less physical activity than their patient and non present-biased counterparts. A 3% lower discount rate and 1.14 unit decrement in the present-bias parameter was associated with a 30 min increase of physical activity per week. This negative association was more significant for certain sub-groups, such as younger and married adults and those with higher staff grade and those who have children. Participants who dropped out of the study earlier were more present-biased. CONCLUSIONS: Results demonstrated that discount rate and present-biasedness have a significant impact on physical activity levels. Such concepts have been largely overlooked and underutilized in physical activity interventions. Promising implications include 1) utilizing individuals' time preferences to better target interventions; 2) taking account of time preferences in the intervention design; 3) interventions attempting to correct for present-biasedness.

Risk-taking in vaccination, surgery, and gambling environments: Evidence from a framed laboratory experiment.

Vaccination involves a tradeoff between two risky alternatives, namely, susceptibility and immunization. By designing a controlled laboratory experiment, we investigate the association between risk preferences and immunization decisions. To contrast the role of risk preferences in vaccination decisions with other domains, we implemented four frames: vaccination, surgery, complex neutral, and simple neutral. We found direct framing effects for females but not for males. For the former, the demand for the safer alternative is significantly larger in the surgery frame than in all other frames. For male subjects, we found a significant association between stated risk preferences and choice behavior in the simple neutral frame but not in the other three frames. For female subjects, we observed the exact opposite. Although the complexity of the decision problem matters, there is no indication of differential roles of risk preferences for a given complexity. We found that the share of consistent choices is significantly larger in the surgery frame as compared to the two neutral frames, that is, context improves decision making. This does not apply to the vaccination frame, so there is something about vaccinations that prevents individuals from better understanding the decision problem at hand.