No effect of birth order on adult risk taking.

Does birth order shape people's propensity to take risks? Evidence is mixed. We used a three-pronged approach to investigate birth-order effects on risk taking. First, we examined the propensity to take risks as measured by a self-report questionnaire administered in the German Socio-Economic Panel, one of the largest and most comprehensive household surveys. Second, we drew on data from the Basel-Berlin Risk Study, one of the most exhaustive attempts to measure risk preference. This study administered 39 risk-taking measures, including a set of incentivized behavioral tasks. Finally, we considered the possibility that birth-order differences in risk taking are not reflected in survey responses and laboratory studies. We thus examined another source of behavioral data: the risky life decision to become an explorer or a revolutionary. Findings from these three qualitatively different sources of data and analytic methods point unanimously in the same direction: We found no birth-order effects on risk taking.

The pyeTribe: Simultaneous eyetracking for economic games.

The recent introduction of inexpensive eyetrackers has opened up a wealth of opportunities for researchers to study attention in interactive tasks. No software package has previously been available to help researchers exploit those opportunities. We created "the pyeTribe," a software package that offers, among others, the following features: first, a communication platform between many eyetrackers to allow for simultaneous recording of multiple participants; second, the simultaneous calibration of multiple eyetrackers without the experimenter's supervision; third, data collection restricted to periods of interest, thus reducing the volume of data and easing analysis. We used a standard economic game (the public goods game) to examine the data quality and demonstrate the potential of our software package. Moreover, we conducted a modeling analysis, which illustrates how combining process and behavioral data can improve models of human decision-making behavior in social situations. Our software is open source.

Decisions from experience: how groups and individuals adapt to change.

Whether groups make better judgments and decisions than individuals has been studied extensively, but most of this research has focused on static tasks. How do groups and individuals compare in settings where the decision environment changes unexpectedly and without notification? This article examines group and individual behavior in decisions from experience where the underlying probabilities change after some trials. Consistent with the previous literature, the results showed that groups performed better than the average individual while the decision task was stable. However, group performance was no longer superior after a change in the decision environment. Group performance was closer to the benchmark of Bayesian updating, which assumed perfect memory. Findings suggest that groups did not adopt decision routines that might have delayed their adaption to change in the environment. Rather, they seem to have coordinated their responses, which led them to behave as if they had better memory and subsequently delayed adaptation.

Birth-order effects on risk taking are limited to the family environment.

Why is the empirical evidence for birth-order effects on human psychology so inconsistent? In contrast to the influential view that competitive dynamics among siblings permanently shape a person's personality, we find evidence that these effects are limited to the family environment. We tested this context-specific learning hypothesis in the domain of risk taking, using two large survey datasets from Germany (SOEP, n = 19,994) and the United States (NLSCYA, n = 29,627) to examine birth-order effects on risk-taking propensity across a wide age range. Specification-curve analyses of a sample of 49,621 observations showed that birth-order effects are prevalent in children aged 10-13 years, but that they decline with age and disappear by middle adulthood. The methodological approach shows the effect is robust. We thus replicate and extend previous work in which we showed no birth-order effects on adult risk taking. We conclude that family dynamics cause birth-order effects on risk taking but that these effects fade as siblings transition out of the home.

Context-specific, scenario-based risk scales.

Reacting to an emergency requires quick decisions under stressful and dynamic conditions. To react effectively, responders need to know the right actions to take given the risks posed by the emergency. While existing research on risk scales focuses primarily on decision making in static environments with known risks, these scales may be inappropriate for conditions where the decision maker's time and mental resources are limited and may be infeasible if the actual risk probabilities are unknown. In this article, we propose a method to develop context-specific, scenario-based risk scales designed for emergency response training. Emergency scenarios are used as scale points, reducing our dependence on known probabilities; these are drawn from the targeted emergency context, reducing the mental resources required to interpret the scale. The scale is developed by asking trainers/trainees to rank order a range of risk scenarios and then aggregating these orderings using a Kemeny ranking. We propose measures to assess this aggregated scale's internal consistency, reliability, and validity, and we discuss how to use the scale effectively. We demonstrate our process by developing a risk scale for subsurface coal mine emergencies and test the reliability of the scale by repeating the process, with some methodological variations, several months later.

Three Theories of Choice and Their Psychology of Losses.

Loss aversion has long been regarded as a fundamental psychological regularity, yet evidence has accumulated to challenge this conclusion. We review three theories of how people make decisions under risk and, as a consequence, value potential losses: expected-utility theory, prospect theory, and risk-sensitivity theory. These theories, which stem from different behavioral disciplines, differ in how they conceptualize value and thus differ in their assumptions about the degree to which value is dependent on state and context; ultimately, they differ in the extent to which they see loss aversion as a stable individual trait or as a response to particular circumstances. We highlight points of confusion that have at least partly fueled the debate on the reality of loss aversion and discuss four sources of conflicting views: confusion of loss aversion with risk aversion, conceptualization of loss aversion as a trait or as state dependent, conceptualization of loss aversion as context dependent or independent, and the attention-aversion gap-the observation that people invest more attentional resources when evaluating losses than when evaluating gains, even when their choices do not reveal loss aversion.

How experimental methods shaped views on human competence and rationality.

Within just 7 years, behavioral decision research in psychology underwent a dramatic change: In 1967, Peterson and Beach (1967) reviewed more than 160 experiments concerned with people's statistical intuitions. Invoking the metaphor of the mind as an intuitive statistician, they concluded that "probability theory and statistics can be used as the basis for psychological models that integrate and account for human performance in a wide range of inferential tasks" (p. 29). Yet in a 1974 Science article, Tversky and Kahneman rejected this conclusion, arguing that "people rely on a limited number of heuristic principles which reduce the complex tasks of assessing probabilities and predicting values to simple judgmental operations" (p. 1124). With that, they introduced the heuristics-and-biases research program, which has profoundly altered how psychology, and the behavioral sciences more generally, view the mind's competences and rationality. How was this radical transformation possible? We examine a previously neglected driver: The heuristics-and-biases program established an experimental protocol in behavioral decision research that relied on described scenarios rather than learning and experience. We demonstrate this shift with an analysis of 604 experiments, which shows that the descriptive protocol has dominated post-1974 research. Specifically, we examine two lines of research addressed in the intuitive-statistician program (Bayesian reasoning and judgments of compound events) and two lines of research spurred by the heuristics-and-biases program (framing and anchoring and adjustment). We conclude that the focus on description at the expense of learning has profoundly shaped the influential view of the error-proneness of human cognition. (PsycInfo Database Record (c) 2021 APA, all rights reserved).

How the threat of losses makes people explore more than the promise of gains.

Until recently, loss aversion has been inferred exclusively from choice asymmetries in the loss and gain domains. This study examines the impact of the prospect of losses on exploratory search in a situation in which exploration is costly. Taking advantage of the largest available data set of decisions from experience, analyses showed that most people explore payoff distributions more under the threat of a loss than under the promise of a gain. This behavioral regularity thus occurs in both costly search and cost-free search (see Lejarraga, Hertwig, & Gonzalez, Cognition, 124, 334-342, 2012). Furthermore, a model comparison identified the simple win-stay-lose-shift heuristic as a likely candidate mechanism behind the loss-gain exploration asymmetry observed. In contrast, models assuming loss aversion failed to reproduce the asymmetry. Moreover, the asymmetry was not simply a precursor of loss aversion but a phenomenon separate from it. These findings are consistent with the recently proposed notion of intensified vigilance in the face of potential losses.

Description and experience: How experimental investors learn about booms and busts affects their financial risk taking.

A few years ago, the world experienced the most severe economic crisis since the Great Depression. According to the depression baby hypothesis, people who live through such macroeconomic shocks take less financial risk in their future lives (e.g., lower stock market participation). This hypothesis has previously been tested against survey data. Here, we tested it in a simulated experimental stock market (based on the Spanish stock index, IBEX-35), varying both the length of historical data available to participants (including or excluding a macroeconomic shock) and the mode of learning about macroeconomic events (through sequential experience or symbolic descriptions). Investors who learned about the market from personal experience took less financial risk than did those who learned from graphs, thus echoing the description-experience gap observed in risky choice. In a second experiment, we reversed the market, turning the crisis into a boom. The description-experience gap persisted, with investors who experienced the boom taking more risk than those who did not. The results of a third experiment suggest that the observed gap is not driven by a wealth effect, and modeling suggests that the description-experience gap is explained by the fact that participants who learn from experience are more risk averse after a negative shock. Our findings highlight the crucial role of the mode of learning for financial risk taking and, by extension, in the legally required provision of financial advice.

How choice ecology influences search in decisions from experience.

Research into human decision-making has often sidestepped the question of search despite its importance across a wide range of domains such as search for food, mates, allies, visual targets or information. Recently, research on decisions from experience has made progress in finding out how individual characteristics shape search for information. Surprisingly little is known, however, about how the properties of the choice ecology shape people's search. To fill this void, we analyzed how two key ecological properties influence search effort: domain of choice (gains vs. losses) and experienced variance (variance vs. no variance). Many people search longer when facing the prospect of losses relative to gains. Moreover, most people search more in options in which they experience variance relative to options they experience as invariant. We conclude that two factors that have been identified as important determinants of choice also influence search of information.