Yuval Rottenstreich

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.

Partition Priming in Judgment Under Uncertainty

We show that likelihood judgments are biased toward an ignorance-prior probability that assigns equal credence to each mutually exclusive event considered by the judge. The value of the ignorance prior depends crucially on how the set of possibilities (i.e., the state space) is subjectively partitioned by the judge. For instance, asking “what is the probability that Sunday will be hotter than any other day next week?” facilitates a two-fold case partition, (Sunday hotter, Sunday not hotter), thus priming an ignorance prior of 1/2. In contrast, asking “what is the probability that the hottest day of the week will be Sunday?” facilitates a seven-fold class partition, (Sunday hottest, Monday hottest, etc.), priming an ignorance prior of 1/7. In four studies, we observed systematic partition dependence: Judgments made by participants presented with either case or class formulations of the same query were biased toward the corresponding ignorance prior.

Comparison, Grouping, and Preference

How does the attractiveness of a particular option depend on comparisons drawn between it and other alternatives? We observe that in many cases, comparisons hurt: When the options being compared have both meaningful advantages and meaningful disadvantages, comparison between options makes each option less attractive. The effects of comparison are crucial in choice problems involving grouped options, because the way in which options are grouped influences which comparisons are likely to be made. In particular, we propose that grouping focuses comparison, making within-group comparisons more likely than between-group comparisons. This line of reasoning suggests that grouping should hurt, and we observe that it does: An option is more likely to be chosen when alone than when part of a group.

Affect, Empathy, and Regressive Mispredictions of Others Preferences Under Risk

Making effective decisions under risk often requires making accurate predictions of other peoples decisions under risk. We experimentally assess the accuracy of peoples predictions of others risky choices. In four studies, we find evidence of systematic inaccuracy: predictions of others choices are too regressive. That is, people predict that others choices will be closer to risk neutrality than those choices actually are. Where people are risk seeking, they predict that others will be risk seeking but substantially less so; likewise, where people are risk averse, they predict that others will be risk averse but substantially less so. Put differently, people predict that others choices will reveal a more muted form of prospect theorys fourfold pattern of risk preferences than actually prevails. Two psychological concepts, the notion of risk-as-feelings and of an empathy gap, help account for regressive mispredictions. We explore several debiasing techniques suggested by these notions and also find that self-reported ratings of empathy moderate the magnitude of regressive mispredictions.

Typical Versus Atypical Unpacking and Superadditive Probability Judgment

Probability judgments for packed descriptions of events (e.g., the probability that a businessman does business with a European country) are compared with judgments for unpacked descriptions of the same events (e.g., the probability that a businessman does business with England, France, or some other European country). The prediction that unpacking can decrease probability judgments, derived from the hypothesis that category descriptions are interpreted narrowly in terms of typical instances, is contrasted to the prediction of support theory that unpacking will generally increase judged probabilities (A. Tversky & D. J. Koehler, 1994). The authors varied the typicality of unpacked instances and found no effect of unpacking with typical instances (additivity) and a negative effect with atypical instances (superadditivity). Support theory cannot account for these findings in its current formulation.

Feeling and Thinking in Memory-Based versus Stimulus-Based Choices

We contrast memory-based and stimulus-based choices, using dual-process theories such as Kahneman and Fredericks system 1/system 2 dichotomy. Systems 1 and 2 are conceptualized as distinct modes of thought, the former automatic and affective, the latter controlled and deliberate. Cognitive load impedes system 2, yielding greater reliance on system 1. In memory-based choice, consumers must maintain relevant options in working memory. Thus, memory-based choices are associated with greater cognitive load than stimulus-based choices. Indeed, we find that memory-based choices favor immediately compelling, affect-rich system 1 options, whereas stimulus-based choices favor affect-poor options whose attractiveness emerges from deliberative system 2 thought. (c) 2007 by JOURNAL OF CONSUMER RESEARCH, Inc..

When Is More Better? On the Relationship Between Magnitude and Subjective Value

We examine three determinants of the relationship between the magnitude of a stimulus and a persons subjective “value” of that stimulus: the process by which value is assessed (either by feeling or by calculation), the evaluability of the relevant magnitude variable (whether the desirability of a given level of that variable can be evaluated independently), and the mode of evaluation (whether stimuli are encountered and evaluated jointly or separately). Reliance on feeling, lack of evaluability, and separate evaluation lead to insensitivity to magnitude. An analysis invoking these factors provides a novel account for why people typically become less sensitive to changes in the magnitude of a stimulus as magnitude increases.

Context-Dependence in Legal Decision Making

Classical theories of choice associate with each option a unique value such that, given an offered set, the decision maker chooses the option of highest value. An immediate consequence is context-independence: the relative ranking of any two options should not vary with the presence or absence of other options. Five experiments reveal two systematic violations of context-independence in legal decision making: the same option is evaluated more favorably when it is intermediate rather than extreme in the offered set (compromise), and the same option is evaluated more favorably in the presence of a similar option that is clearly inferior to it (contrast). Prescriptive implications of context-dependence in legal decision making are discussed.

Between Ignorance and Truth: Partition Dependence and Learning in Judgment Under Uncertainty

In 3 studies, participants viewed sequences of multiattribute objects (e.g., colored shapes) appearing with varying frequencies and judged the likelihood of the attributes of those objects. Judged probabilities reflected a compromise between (a) the frequency with which each attribute appeared and (b) the ignorance prior probability cued by the number of distinct values that the focal attribute could take on. Thus, judged probabilities were partition dependent, varying with the number of events into which the state space was subjectively divided. This bias was diminished among participants more confident in what they learned, was strong and insensitive to level of confidence when ignorance priors were especially salient, and required ignorance priors to be salient only when probabilities were elicited (not during encoding).