Yaniv Hanoch

Domain Specificity in Experimental Measures and Participant Recruitment An Application to Risk-Taking Behavior

We challenge the prevailing notion that risk taking is a stable trait, such that individuals show consistent risk-taking/aversive behavior across domains. We subscribe to an alternative approach that appreciates the domain-specific nature of risk taking. More important, we recognize heterogeneity of risk profiles among experimental samples and introduce a new methodology that takes this heterogeneity into account. Rather than using a convenient subject pool (i.e., university students), as is typically done, we specifically targeted relevant subsamples to provide further validation of the domain-specific nature of risk taking. Our research shows that individuals who exhibit high levels of risk-taking behavior in one content area (e.g., bungee jumpers taking recreational risks) can exhibit moderate levels in other risky domains (e.g., financial). Furthermore, our results indicate that risk taking among targeted subsamples can be explained within a cost-benefit framework and is largely mediated by the perceived benefit of the activity, and to a lesser extent by the perceived risk.

When less is more Information, Emotional Arousal and the Ecological Reframing of the Yerkes-Dodson Law

Easterbrook’s (1959) cue-utilization theory has been widely used to explain the inverted U-shaped relationship, initially established by Yerkes and Dodson, between emotional arousal and performance. The basic tenet of the theory assumes that high levels of arousal lead to restriction of the amount of information to which agents can pay attention. One fundamental derivative of the theory, as typically conceived in psychology, is the assumption that restriction of information or the ability to process a smaller set of data is fundamentally disadvantageous. To explore the merits of this point, we first argue that the relationship depicted by this collapsed version of the Yerkes-Dodson law is far too simplistic to account for the complex relationship between various cognitive functions and emotional arousal. Second, conceptualization of arousal as a unidimensional construct needs to be rejected. Finally, and most importantly, we challenge the notion that having more information available is necessarily preferable to having less information.

“Neither an angel nor an ant”: Emotion as an aid to bounded rationality

The role of emotion as a source of bounded rationality has been largely ignored. Following Herbert Simon, economists as well as psychologists have mainly focused on cognitive constraints while neglecting to integrate the growing body of research on emotion which indicates that reason and emotion are interconnected. Accordingly, the present paper aims to bridge the existing gap. By establishing a link between the two domains of research, emotion and bounded rationality, it will be suggested that emotions work together with rational thinking in two distinct ways, and thereby function as an additional source of bounded rationality. The aim, therefore, is not to offer an alternative to bounded rationality; rather, the purpose is to elaborate and supplement themes emerging out of bounded rationality.

Numeracy and Medicare Part D: The Importance of Choice and Literacy for Numbers in Optimizing Decision Making for Medicare's Prescription Drug Program

Studies on decision making have come to challenge the idea that having more choice is necessarily better. The Medicare prescription drug program (Part D) has been designed to maximize choice for the consumer but has simultaneously created a highly complex decision task with dozens of options. In this study, in a sample of 121 adults, we examined the impact that increasing choice options has on decision-making abilities in older versus younger adults. Consistent with our hypotheses, we found that participants performed better with less choice versus more choice, and that older adults performed worse than younger adults across conditions. We further examined the role that numeracy may play in making these decisions and the role of more traditional cognitive variables such as working memory, executive functioning, intelligence, and education. Finally, we examined how personality style may interact with cognitive variables and age in decision making. Regression analysis revealed that numeracy is related to performance across the lifespan. When controlling for additional measures of cognitive ability, we found that although age was no longer associated with performance, numeracy remained significant. In terms of decision style, personality characteristics were not related to performance. Our results add to the mounting evidence for the critical role of numeracy in decision making across decision domains and across the lifespan.

Risk-Taking Differences Across the Adult Life Span: A Question of Age and Domain

BACKGROUND Older adults face important risky decisions about their health, their financial future, and their social environment. We examine age differences in risk-taking behaviors in multiple risk domains across the adult life span. METHODS A cross-sectional study was conducted in which 528 participants from 18 to 93 years of age completed the Domain-Specific Risk-Taking (DOSPERT) scale, a survey measuring risk taking in 5 different domains. RESULTS Our findings reveal that risk-taking tendencies in the financial domain reduce steeply in older age (at least for men). Risk taking in the social domain instead increases slightly from young to middle age, before reducing sharply in later life, whereas recreational risk taking reduces more steeply from young to middle age than in later life. Ethical and health risk taking reduce relatively smoothly with age. Our findings also reveal gender differences in risk taking with age. Financial risk taking reduced steeply in later life for men but not for women, and risk taking in the social domain reduced more sharply for women than for men. DISCUSSION We discuss possible underlying causes of the domain-specific nature of risk taking and age.

Bounded Rationality, Emotions and Older Adult Decision Making: Not So Fast and Yet So Frugal

Herbert Simon’s work on bounded rationality has had little impact on researchers studying older adults’ decision making. This omission is surprising, as human constraints on computation and memory are exacerbated in older adults. The study of older adults’ decision-making processes could benefit from employing a bounded rationality perspective, but any such attempt must take into account the role that emotions play in older adults’ information processing, memory, and attention allocation. This is especially the case because older adults show relatively less decrements in performance when tasks are imbedded in or laden with emotional stimuli, and they exhibit a greater tendency to rely on emotional information. We examine recent work on bounded rationality and studies investigating older adults’ utilization of, and attention to, emotional information, with the aim of creating a framework that captures the mechanisms underlying older adults’ decision making.

Risky Decision Making in Younger and Older Adults: The Role of Learning

Are older adults risk seeking or risk averse? Answering this question might depend on both the task used and the analysis performed. By modeling responses to the Balloon Analogue Risk Task (BART), our results illustrate the value of modeling as compared to relying on common analysis techniques. While analysis of overall measures suggested initially that older and younger adults do not differ in their risky decisions, our modeling results indicated that younger adults were at first more willing to take greater risks. Furthermore, older adults may be more cautious when their decision making is based on initial perceptions of risk, rather than learning following some experience with a task.

When Child Development Meets Economic Game Theory: An Interdisciplinary Approach to Investigating Social Development

Game theory has been one of the most prominent theories in the social sciences, influencing diverse academic disciplines such as anthropology, biology, economics, and political science. In recent years, economists have employed game theory to investigate behaviors relating to fairness, reciprocity, and trust. Surprisingly, this research has not found much resonance in psychological research on social development, even though the two disciplines share a common interest in explaining similar social behaviors and phenomena. We argue that combining economic game theory with developmental psychology can prove to be valuable for both disciplines: developmental psychology can contribute its knowledge about the ontogenesis of social abilities and competencies to economic research, thus providing economists with new theories and understanding. Game theory, on the other hand, can offer developmental psychologists new methodologies and tools for investigating social development.

Choosing the right medicare prescription drug plan: the effect of age, strategy selection, and choice set size.

OBJECTIVE The Medicare Modernization Act of 2003 (better known as Medicare Part D) represents the most important change to Medicare since its inception in the mid-1960s. The large number of drug plans being offered has raised concern over the complex design of the program. The purposes of this article are to examine the effect of age and choice set size (3 vs. 9 drug plans) on decision processes, strategy selection, and decision quality within the Medicare Part D program. METHOD One hundred fifty individuals completed a MouselabWeb study, a computer-based program that allowed us to trace the information acquisition process, designed to simulate the official Medicare Web site. RESULTS The data reveal that participants identified the lowest cost plan only 46% of the time. As predicted, an increase in choice set size (3 vs. 9) was associated with 0.25 times the odds of correctly selecting the lowest cost plan, representing an average loss of

Who Thinks That Part D Is Too Complicated? Survey Results on the Medicare Prescription Drug Benefit

48.71. Older participants, likewise, tended to make poorer decisions. CONCLUSION The study provides some indication that decision strategy mediates the association between age and choice quality and provides further insight regarding how to better design a choice environment that will improve the performance of older consumers.