Effects of monetary reserves and rate of gain on human risky choice under budget constraints

Pietras, Cynthia J.; Searcy, Gabriel D.; Huitema, Brad; Brandt, Andrew E.

doi:10.1016/j.beproc.2008.01.016

Cited by 17 publications

(15 citation statements)

References 28 publications

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“…The proportion of risky choices in the blocks with goals as low as 20 (M=.29,SD=.17) or 24 (M=.17, SD=.17) were lower than the risky choice proportions in the blocks with a high goal of 40 (M=.75, SD=.20); with a significant effect 2 of goal on risky choice, F(1, 59) = 254, p < .001. This goaldependent change in risk-seeking behavior is in line with previous results (Fujimoto & Takahashi, 2016;Korn & Bach, 2018;Pietras et al, 2008). The subsequent analysis will analyze the data by goal, trial, point total, against the optimal model as a gold standard.…”

Section: Resultssupporting

confidence: 83%

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Prospect Theory and Optimal Risky Choices with Goals

Jarecki¹,

Rieskamp²

2020

Preprint

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Decision making under risk is often studied as a preferential choice governed by stable individual personality characteristics, but risky choice can also be viewed as a dynamic problem of resource accumulation to survive. When decision makers aim to reach a particular goal in limited time, such as “earn at least $100 in five choices,” risky choice becomes a non-trivial planning problem. This problem has an optimal solution that can differ from immediate expected-value maximization. We studied the optimality of risky choices under such minimum goal requirements experimentally and find that the observed choices under goals approximate the optimal solution. However, because the optimal model is very complex, we examine if simpler models can predict people’s choices better. We test an extended version of prospect theory, assuming a dynamic reference point that depends on the distance to the goal. This “dynamic prospect theory” was better than the alternative model in describing people’s decisions (i.e., for 63% of the participants, it was the best model). Our findings show that humans can excel in a highly complex, dynamic, risky choice problem and that a dynamic version of prospect theory provides one possible explanation for how people decide under risk when long-term goals matter.

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Section: Resultssupporting

confidence: 83%

“…Procedure. Participants engaged in a risky choice under requirement task (Figure 2, following Pietras, Searcy, Huitema, & Brandt (2008)). The task consisted in collecting points to reach a point goal by making five choices among a pair of risky gambles.…”

Section: Participants Sixty Participants Recruited From Prolificmentioning

confidence: 99%

Prospect Theory and Optimal Risky Choices with Goals

Jarecki¹,

Rieskamp²

2020

Preprint

View full text Add to dashboard Cite

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“…One apparent question is whether these effects are facilitated by a common mechanism. Previous research has suggested that the value of money is a modern derivative of the desire for primary rewards [ 47 ], and that the predictions of the energy budget rule are met when average monetary reward rate is used as a proxy for metabolic energy balance [ 48 ]. Likewise, money and juice reinforcers cause overlapping neural responses [ 49 ].…”

Section: Discussionmentioning

confidence: 99%

High monetary reward rates and caloric rewards decrease temporal persistence

2017

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Temporal persistence refers to an individual's capacity to wait for future rewards, while forgoing possible alternatives. This requires a trade-off between the potential value of delayed rewards and opportunity costs, and is relevant to many real-world decisions, such as dieting. Theoretical models have previously suggested that high monetary reward rates, or positive energy balance, may result in decreased temporal persistence. In our study, 50 fasted participants engaged in a temporal persistence task, incentivised with monetary rewards. In alternating blocks of this task, rewards were delivered at delays drawn randomly from distributions with either a lower or higher maximum reward rate. During some blocks participants received either a caloric drink or water. We used survival analysis to estimate participants' probability of quitting conditional on the delay distribution and the consumed liquid. Participants had a higher probability of quitting in blocks with the higher reward rate. Furthermore, participants who consumed the caloric drink had a higher probability of quitting than those who consumed water. Our results support the predictions from the theoretical models, and importantly, suggest that both higher monetary reward rates and physiologically relevant rewards can decrease temporal persistence, which is a crucial determinant for survival in many species.

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“…Indeed, a direct link between these conceptual frameworks from psychology and ecology is suggested by observations that human monetary decisions under risk are systematically influenced by an ‘earnings budget’, and that risk-preference in starlings changes according to relative amounts of gain or loss in food reward, even when overall nutritional intake is controlled (i.e. experimental manipulations of the reference point) [22], [23].…”

Section: Introductionmentioning

confidence: 99%

Metabolic State Alters Economic Decision Making under Risk in Humans

et al. 2010

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BackgroundAnimals' attitudes to risk are profoundly influenced by metabolic state (hunger and baseline energy stores). Specifically, animals often express a preference for risky (more variable) food sources when below a metabolic reference point (hungry), and safe (less variable) food sources when sated. Circulating hormones report the status of energy reserves and acute nutrient intake to widespread targets in the central nervous system that regulate feeding behaviour, including brain regions strongly implicated in risk and reward based decision-making in humans. Despite this, physiological influences per se have not been considered previously to influence economic decisions in humans. We hypothesised that baseline metabolic reserves and alterations in metabolic state would systematically modulate decision-making and financial risk-taking in humans.Methodology/Principal FindingsWe used a controlled feeding manipulation and assayed decision-making preferences across different metabolic states following a meal. To elicit risk-preference, we presented a sequence of 200 paired lotteries, subjects' task being to select their preferred option from each pair. We also measured prandial suppression of circulating acyl-ghrelin (a centrally-acting orexigenic hormone signalling acute nutrient intake), and circulating leptin levels (providing an assay of energy reserves). We show both immediate and delayed effects on risky decision-making following a meal, and that these changes correlate with an individual's baseline leptin and changes in acyl-ghrelin levels respectively.Conclusions/SignificanceWe show that human risk preferences are exquisitely sensitive to current metabolic state, in a direction consistent with ecological models of feeding behaviour but not predicted by normative economic theory. These substantive effects of state changes on economic decisions perhaps reflect shared evolutionarily conserved neurobiological mechanisms. We suggest that this sensitivity in human risk-preference to current metabolic state has significant implications for both real-world economic transactions and for aberrant decision-making in eating disorders and obesity.

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Effects of monetary reserves and rate of gain on human risky choice under budget constraints

Cited by 17 publications

References 28 publications

Prospect Theory and Optimal Risky Choices with Goals

Prospect Theory and Optimal Risky Choices with Goals

High monetary reward rates and caloric rewards decrease temporal persistence

Metabolic State Alters Economic Decision Making under Risk in Humans

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