Jason Anthony Aimone

High Stakes Behavior with Low Payoffs: Inducing Preferences with Holt-Laury Gambles

Kahneman and Tversky (1979) argued that risky decisions in high stakes environments can be informed using questionnaires with hypothetical choices. Yet results by Holt and Laury (2002) suggest that questionnaire responses and decisions in hypothetical and low monetary payoff environments do not well predict decisions in higher monetary payoff environments. This raises the question of whether investigating decision making in high stakes environments requires using high stakes. Here we show that one can induce preferences using the binary-lottery reward technique (e.g., Berg et al., 1986) in order to study high-stakes decision making using low-stakes. In particular, we induce preferences such that decisions in a low-stakes environment reflect well the choices made in the high stakes environment of Holt and Laury (2002). This finding is of interest to anyone interested in studying high-stakes decision behavior without paying high stakes.

Endogenous Group Formation via Unproductive Costs

Sacrifice is widely believed to enhance cooperation in churches, communes, gangs, clans, military units, and many other groups. We find that sacrifice can also work in the lab, apart from special ideologies, identities, or interactions. Our subjects play a modified VCM game—one in which they can voluntarily join groups that provide reduced rates of return on private investment. This leads to both endogenous sorting (because free-riders tend to reject the reduced-rate option) and substitution (because reduced private productivity favours increased club involvement). Seemingly unproductive costs thus serve to screen out free-riders, attract conditional cooperators, boost club production, and increase member welfare. The sacrifice mechanism is simple and particularly useful where monitoring difficulties impede punishment, exclusion, fees, and other more standard solutions.

Neural signatures of betrayal aversion: an fMRI study of trust

Decisions are said to be ‘risky’ when they are made in environments with uncertainty caused by nature. By contrast, a decision is said to be ‘trusting’ when its outcome depends on the uncertain decisions of another person. A rapidly expanding literature reveals economically important differences between risky and trusting decisions, and further suggests these differences are due to ‘betrayal aversion’. While its neural foundations have not been previously illuminated, the prevailing hypothesis is that betrayal aversion stems from a desire to avoid negative emotions that arise from learning ones trust was betrayed. Here, we provide evidence from an fMRI study that supports this hypothesis. In particular, our data indicate that the anterior insula modulates trusting decisions that involve the possibility of betrayal.

Beneficial Betrayal Aversion

Many studies demonstrate the social benefits of cooperation. Likewise, recent studies convincingly demonstrate that betrayal aversion hinders trust and discourages cooperation. In this respect, betrayal aversion is unlike socially “beneficial” preferences including altruism, fairness and inequity aversion, all of which encourage cooperation and exchange. To our knowledge, other than the suggestion that it acts as a barrier to rash trust decisions, the benefits of betrayal aversion remain largely unexplored. Here we use laboratory experiments with human participants to show that groups including betrayal-averse agents achieve higher levels of reciprocity and more profitable social exchange than groups lacking betrayal aversion. These results are the first rigorous evidence on the benefits of betrayal aversion, and may help future research investigating cultural differences in betrayal aversion as well as future research on the evolutionary roots of betrayal aversion. Further, our results extend the understanding of how intentions affect social interactions and exchange and provide an effective platform for further research on betrayal aversion and its effects on human behavior.

The Betrayal Aversion Elicitation Task: An Individual Level Betrayal Aversion Measure

Research on betrayal aversion shows that individuals’ response to risk depends not only on probabilities and payoffs, but also on whether the risk includes a betrayal of trust. While previous studies focus on measuring aggregate levels of betrayal aversion, the connection between an individual’s own betrayal aversion and other individually varying factors, including risk preferences, are currently unexplored. This paper develops a new task to elicit an individual’s level of betrayal aversion that can then be compared to individual characteristics. We demonstrate the feasibility of our new task and show that our aggregate individual results are consistent with previous studies. We then use this classification to ask whether betrayal aversion is correlated with risk aversion. While we find risk aversion and betrayal aversion have no significant relationship, we do observe that risk aversion is correlated with non-social risk preferences, but not the social, betrayal related, risk component of the new task.

Valuation in major depression is intact and stable in a non-learning environment

The clinical diagnosis and symptoms of major depressive disorder (MDD) have been closely associated with impairments in reward processing. In particular, various studies have shown blunted neural and behavioral responses to the experience of reward in depression. However, little is known about whether depression affects individuals’ valuation of potential rewards during decision-making, independent from reward experience. To address this question, we used a gambling task and a model-based analytic approach to measure two types of individual sensitivity to reward values in participants with MDD: ‘risk preference,’ indicating how objective values are subjectively perceived, and ‘inverse temperature,’ determining the degree to which subjective value differences between options influence participants’ choices. On both of these measures of value sensitivity, participants with MDD were comparable to non-psychiatric controls. In addition, both risk preference and inverse temperature were stable over four laboratory visits and comparable between the groups at each visit. Neither valuation measure varied with severity of clinical symptoms in MDD. These data suggest intact and stable value processing in MDD during risky decision-making.

Anxiety, Risk Preferences, Betrayal Aversion, and the Growth of Interpersonal Trust

Anxiety is often associated with poor economic outcomes, including earning 13% to 18% less than non-anxious peers. On the other hand, few studies explore how anxiety affects an individual’s economic behavior. In part, this is due to a limited focus of clinical research on the impact of psychopathology, more generally, on economic choice. It is also due to the perceived conceptual overlap of anxiety with risk aversion and betrayal aversion, well-known behavioral economic characteristics. Our laboratory experiments disentangle these factors and show that anxiety has an independent effect on decision-making and merits separate theoretical modeling and experimental treatment and investigation. More specifically, we find that anxiety and betrayal aversion independently inhibit the growth of economic trust while greater risk tolerance is associated with an overall increased level of trust. Our findings suggest that anxiety diminishes the ability to adapt in changing social economic environments such as workplaces. In addition, the behavioral regularities that we find provide the foundation for future theoretical modeling.

Risky decision-making in major depression is stable and intact

The clinical diagnosis and symptoms of major depressive disorder (MDD) have been closely associated with impairments in reward processing. In particular, various studies have shown blunted neural and behavioral responses to the experience of reward in depression. However, little is known about whether depression affects individuals’ valuation of potential rewards during decision-making, independent from reward experience. To address this question, we used a gambling task and a model-based analytic approach to measure two types of individual sensitivity to reward values in participants with MDD: ‘risk preference,’ indicating how objective values are subjectively perceived, and ‘inverse temperature,’ determining the degree to which subjective value differences between options influence participants’ choices. On both of these measures of value sensitivity, participants with MDD were comparable to non-psychiatric controls. In addition, both risk preference and inverse temperature were stable over four laboratory visits and comparable between the groups at each visit. Neither valuation measure varied with severity of clinical symptoms in MDD. These data suggest intact and stable value processing in MDD during risky decision-making.The clinical diagnosis and symptoms of major depressive disorder (MDD) have been closely associated with impairments in reward processing. In particular, various studies have shown blunted neural and behavioral responses to the experience of reward in depression. However, little is known about whether depression affects individuals′ valuation of potential rewards during decision-making, independent from reward experience. To address this question, we used a gambling task and a model-based analytic approach to measure two types of individual sensitivity to reward values in participants with MDD: ′risk preference,′ indicating how objective values are subjectively perceived and ′inverse temperature,′ determining the degree to which subjective value differences between options influences participants′ choices. On both of these measures of value sensitivity, participants with MDD were comparable to non-psychiatric controls. Both risk preference and inverse temperature were also stable over four laboratory visits and comparable between the groups at each visit. Moreover, neither value sensitivity measure varied with severity of clinical symptoms in MDD. These data suggest intact and stable value processing in MDD during risky decision-making.

My Risky Opportunities but Our Investment: An Experiment on Trust-Over-Risk

Trust is a key factor affecting investors’ decisions to invest in other agents. These “trustee-agents” use an investor’s funds to engage in unique risky opportunities. However, little is known about trustee reciprocity in such environments. Our experimental environment is the first to combine a trust game with a risk taking game to explore both investors’ trust and financial trustees’ reciprocation in such trust-over-risk environments. We find widespread Reciprocity-over-risk, whereby trustee-agents deviate from their own preferred risk choices in both shared and non-shared risk environments. Further, punishment threats push trustees to systematically choose risk opportunities that have lower expected monetary values.

‘Nudging’ Risky Decision-Making: The Causal Influence of Information Order

Recent studies have suggested a correlation between information acquisition and value maximization in risky decision-making. We show that changing how information is acquired can “nudge” agents into riskier decisions, suggesting that choice architecture influences observed risky decisions.