Information Processing in Decisions Under Risk: Evidence for Compensatory Strategies Based on Automatic Processes

37 Pages Posted: 3 Dec 2008

See all articles by Andreas Glöckner

Andreas Glöckner

Max Planck Institute for Research on Collective Goods; University of Cologne

Ann-Katrin Herbold

University of Bonn - Department of Psychiatry

Date Written: November 2008

Abstract

Many everyday decisions have to be made under risk and can be interpreted as choices between gambles with different outcomes that are realized with specific probabilities. The underlying cognitive processes were investigated by testing six sets of hypotheses concerning choices, decision times, and information search derived from cumulative prospect theory, decision field theory, priority heuristic and parallel constraint satisfaction models. Our participants completed forty decision tasks of two gambles with two non-negative outcomes each. Information search was recorded using eye-tracking technology. Results for all dependent measures conflict with the prediction of the non-compensatory priority heuristic and indicate that individuals use compensatory strategies. Choice proportions are well predicted by a cumulative prospect theory. Process measures, however, indicate that individuals do not rely on deliberate calculations of weighted sums. Information integration processes seem to be better explained by models that partially rely on automatic processes such as decision field theory or parallel constraint satisfaction models.

Keywords: Risky Decisions, Cumulative Prospect Theory, Decision Field Theory, Priority Heuristic, Parallel Constraint Satisfaction, Eye Tracking, Intuition

Suggested Citation

Glöckner, Andreas and Herbold, Ann-Katrin, Information Processing in Decisions Under Risk: Evidence for Compensatory Strategies Based on Automatic Processes (November 2008). MPI Collective Goods Preprint, No. 2008/42. Available at SSRN: https://ssrn.com/abstract=1307664 or http://dx.doi.org/10.2139/ssrn.1307664

Andreas Glöckner (Contact Author)

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

HOME PAGE: http://www.coll.mpg.de/team/page/andreas_gloeckner

University of Cologne ( email )

Richard-Strauss-Str. 2
Köln, 50931
Germany

HOME PAGE: http://soccco.uni-koeln.de/andreas-gloeckner.html

Ann-Katrin Herbold

University of Bonn - Department of Psychiatry ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany
+49 0 228 287 16966 (Phone)
+49 0 228 287 19125 (Fax)

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