Christopher K. Hsee

Risk as Feelings

Virtually all current theories of choice under risk or uncertainty are cognitive and consequentialist. They assume that people assess the desirability and likelihood of possible outcomes of choice alternatives and integrate this information through some type of expectation-based calculus to arrive at a decision. The authors propose an alternative theoretical perspective, the risk-as-feelings hypothesis, that highlights the role of affect experienced at the moment of decision making. Drawing on research from clinical, physiological, and other subfields of psychology, they show that emotional reactions to risky situations often diverge from cognitive assessments of those risks. When such divergence occurs, emotional reactions often drive behavior. The risk-as-feelings hypothesis is shown to explain a wide range of phenomena that have resisted interpretation in cognitive-consequentialist terms.

Preference Reversals between Joint and Separate Evaluations of Options: A Review and Theoretical Analysis

Arguably, all judgments and decisions are made in 1 (or some combination) of 2 basic evaluation modes-joint evaluation mode (JE), in which multiple options are presented simultaneously and evaluated comparatively, or separate evaluation mode (SE), in which options are presented in isolation and evaluated separately. This article reviews recent literature showing that people evaluated options differently and exhibit reversals of preferences for options between JE and SE. The authors propose an explanation for the JE/SE reversal based on a principle called the evaluability hypothesis. The hypothesis posits that it is more diffecult to evaluate the desirability of values on some attributes than on others and that, compared with easy-to-evaluate attributes, difficult-to-evaluate attributes have a greater impact in JE than in SE.

Money, Kisses, and Electric Shocks: On the Affective Psychology of Risk

Prospect theorys S-shaped weighting function is often said to reflect the psychophysics of chance. We propose an affective rather than psychophysical deconstruction of the weighting function resting on two assumptions. First, preferences depend on the affective reactions associated with potential outcomes of a risky choice. Second, even with monetary values controlled, some outcomes are relatively affect-rich and others relatively affect-poor. Although the psychophysical and affective approaches are complementary, the affective approach has one novel implication: Weighting functions will be more S-shaped for lotteries involving affect-rich than affect-poor outcomes. That is, people will be more sensitive to departures from impossibility and certainty but less sensitive to intermediate probability variations for affect-rich outcomes. We corroborated this prediction by observing probability-outcome interactions: An affect-poor prize was preferred over an affect-rich prize under certainty, but the direction of preference reversed under low probability. We suggest that the assumption of probability-outcome independence, adopted by both expected-utility and prospect theory, may hold across outcomes of different monetary values, but not different affective values.

Music, Pandas, and Muggers: On the Affective Psychology of Value

This research investigated the relationship between the magnitude or scope of a stimulus and its subjective value by contrasting 2 psychological processes that may be used to construct preferences: valuation by feeling and valuation by calculation. The results show that when people rely on feeling, they are sensitive to the presence or absence of a stimulus (i.e., the difference between 0 and some scope) but are largely insensitive to further variations of scope. In contrast, when people rely on calculation, they reveal relatively more constant sensitivity to scope. Thus, value is nearly a step function of scope when feeling predominates and is closer to a linear function when calculation predominates. These findings may allow for a novel interpretation of why most real-world value functions are concave and how the processes responsible for nonlinearity of value may also contribute to nonlinear probability weighting.

Velocity relation: Satisfaction as a function of the first derivative of outcome over time.

Social scientists have found that satisfaction with an outcome is positively related not just to the position (i.e., actual level) of the outcome, but also to the displacement (i.e., directional difference) between the current level and a reference level. Extending the displacement notion, the present research hypothesized that satisfaction is positively related to the velocity (i.e., rate) at which the outcome changes over time, and tested this hypothesis by using hypothetical outcomes presented in questionnaires (Study 1) and displayed on a computer screen (Study 2). Results from both studies supported the hypothesis. The findings are discussed with regard to their implications for a formal model of the outcome-satisfaction relationship and for a dynamic analysis of human behavior. The present research investigates the relation(s) between the desired outcome of an event and the satisfaction of the person who experiences the event. For example, what is the relation between the grade point average (GPA) of a student and his satisfaction with his grade? What is the relation between the salary of a worker and her satisfaction with her salary? What is the relation between the amount of fame an actor has and his satisfaction with it? What is the relation between the weight of a dieter and her satisfaction with her weight? We believe that there exists more than one relation between outcome and satisfaction. Probably the simplest relation is that satisfaction depends on the actual value of the outcome: The more (less) positive an outcome, the greater (less) the satisfaction.1 For example, the higher the GPA, the more satisfied a student is with it; the higher the salary, the more satisfied a worker is with it. Formally, this relation can be expressed as

Less Is Better: When Low-value Options Are Valued More Highly than High-value Options

This research demonstrates a less-is-better effect in three contexts: (1) a person giving a

Will Products Look More Attractive When Presented Separately or Together

45 scarf as a gift was perceived to be more generous than one giving a

A Fundamental Prediction Error: Self-Others Discrepancies in Risk Preference

55 coat; (2) an overfilled ice cream serving with 7 oz of ice cream was valued more than an underfilled serving with 8 oz of ice cream; (3) a dinnerware set with 24 intact pieces was judged more favourably than one with 31 intact pieces (including the same 24) plus a few broken ones. This less-is-better effect occurred only when the options were evaluated separately, and reversed itself when the options were juxtaposed. These results are explained in terms of the evaluability hypothesis, which states that separate evaluations of objects are often influenced by attributes which are easy to evaluate rather than by those which are important.

Stretching the Truth: Elastic Justification and Motivated Communication of Uncertain Information

This research examines whether each of two different options of comparable overall quality will be perceived more positively when presented in isolation and evaluated separately (separate evaluation) or when juxtaposed and evaluated side by side (joint evaluation). Six studies, involving either judgment or choice as the dependent variable, reveal a general principle: If the focal options are already attractive (relative to their natural reference) in separate evaluation, then subjecting these options to joint evaluation will hurt their attractiveness. If the focal options are unattractive (relative to their reference) in separate evaluation, subjecting them to joint evaluation will enhance their attractiveness. Copyright 1998 by the University of Chicago.

Decision and experience : why don't we choose what makes us happy?

This research examined whether people can accurately predict the risk preferences of others.Three experiments featuring different designs revealed a systematic bias: that participants predicted others to be more risk seeking than themselves in risky choices, regardless of whether the choices were between options with negative outcomes or with positive outcomes. This self-others discrepancy persisted even if a monetary incentive was offered for accurate prediction. However, this discrepancy occurred only if the target of prediction was abstract and vanished if the target was vivid. A risk-as-feelings hypothesis was introduced to explain these findings.