Risk and Reward Preferences under Time Pressure*

Nursimulu, Anjali; Bossaerts, Peter

doi:10.1093/rof/rft013

Cited by 40 publications

(22 citation statements)

References 42 publications

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“…Likewise, Young et al (2012) found that under time pressure probability discriminability was reduced and as a result there was more overweighting of small probabilities and more underweighting of large probabilities. A higher degree of time pressure operates in the same direction in the experiment of Nursimulu and Bossaerts (2014). Busemeyer (1985), however, found an opposite effect; there is a greater willingness to take gambles with positive expected value but lower to take gambles with negative expected value when time pressure is imposed.…”

Section: Literature Reviewmentioning

confidence: 78%

Time pressure and risk taking in auctions: A field experiment

Haji

Krawczyk

Sylwestrzak

et al. 2019

Journal of Behavioral and Experimental Economics

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Auctions often require risk taking under time pressure. However, little is known about how time pressure moderates the relationship between uncertainty of outcomes and bidding behavior. This study consists of a field experiment in which participants are invited to a Vickrey auction to elicit their willingness to pay for a lottery ticket. The time available to place a bid and also the skewness of the lottery (holding the expected value constant) are systematically manipulated. We find that under high time pressure participants are less likely to place a bid at all. Furthermore, participants who do place a bid under high time pressure bid significantly less than participants under low time pressure. The main finding is thus that increased time pressure significantly decreases risk taking. The effect seems to be particularly strong for the lottery with a high probability of winning and for female subjects.

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Section: Literature Reviewmentioning

confidence: 78%

Time pressure and risk taking in auctions: A field experiment

Haji

Krawczyk

Sylwestrzak

et al. 2019

Journal of Behavioral and Experimental Economics

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“…This time pressure can alter many facets of decision-making, potentially making people more impulsive, defensive, or stressed, and occasionally more risk seeking (Ariely & Zakay, 2001;Dror, Busemeyer, & Basola, 1999;Gladstein & Reilly, 1985;Kelly & Karau, 1999;Nursimulu & Bossaerts, 2014;Zakay & Wooler, 1984). Time pressure may also cause a shift towards more automatic, heuristic-based decisions (Kahneman & Frederick, 2002).…”

Section: Introductionmentioning

confidence: 99%

“…Although these results suggest that time pressure increases risky choice, the experimental designs of the IGT and BART do not allow us to fully disentangle effects of risk preference and expected value, as the options differ in both risk and outcome value. Other experience-based tasks have also been used to investigate the effects of time pressure on risky choice, but these have also manipulated additional choice variables, such as using asymmetric probabilities or non-binary outcomes for the risky options or different expected values for the safe and risky options (Goldstein & Busemeyer, 1992;Nursimulu & Bossaerts, 2014). Thus, it has not yet been shown if time pressure would increase risk seeking in decisions from experience when other choice variables are held constant.…”

Section: Introductionmentioning

confidence: 99%

Rapid makes risky: Time pressure increases risk seeking in decisions from experience

Madan

Spetch

Ludvig

2015

Journal of Cognitive Psychology

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Time pressure is a common constraint on many real-world decisions, such as those made by traders placing orders in the stock market, bidders in an auction, or gamblers at a casino. Many of these situations also involve elements of risk or uncertainty. Previous research has mostly found that time pressure leads to more risky choices. These previous studies, however, have examined decisions made from probabilities that were explicitly described, rather than learned through experienced outcomes. Here we tested how time pressure influences decisions from experience, while manipulating outcome value. Participants under greater time pressure chose risky options more often, independent of outcome value. Our results suggest that, as with decisions from description, time pressure moderately increases risk seeking in decisions from experience.

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“…While this does not prove temporal precedence, it is interesting to note that this profile mirrors variance being a first-order measure of uncertainty while skewness (mathematically) reflects a second-order attribute (the amount of relative gain vs. loss inherent in a gamble). Although recent investigations in trading behavior under time pressure suggest that skew sensitivity emerges rapidly (Nursimulu and Bossaerts, 2013) it is tempting to speculate that this time delay is sufficiently large to potentially affect outcomes in fast-paced markets (where orders can be transacted within 125 ms).…”

Section: Discussionmentioning

confidence: 99%

“…Utility theory proposes risk sensitivity as an implicit by-product of a monotonically decreasing utility function (Pratt, 1964; Müller and Machina, 1987). In this schema, a separate processing pathway for risk is superfluous, as risk-preference is purely a consequence of translating objective quantities into subjective values.…”

Section: Discussionmentioning

confidence: 99%

The chronometry of risk processing in the human cortex

et al. 2013

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The neuroscience of human decision-making has focused on localizing brain activity correlating with decision variables and choice, most commonly using functional MRI (fMRI). Poor temporal resolution means these studies are agnostic in relation to how decisions unfold in time. Consequently, here we address the temporal evolution of neural activity related to encoding of risk using magnetoencephalography (MEG), and show modulations of electromagnetic power in posterior parietal and dorsomedial prefrontal cortex (DMPFC) which scale with both variance and skewness in a lottery, detectable within 500 ms following stimulus presentation. Electromagnetic responses in somatosensory cortex following this risk encoding predict subsequent choices. Furthermore, within anterior insula we observed early and late effects of subject-specific risk preferences, suggestive of a role in both risk assessment and risk anticipation during choice. The observation that cortical activity tracks specific and independent components of risk from early time-points in a decision-making task supports the hypothesis that specialized brain circuitry underpins risk perception.

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Risk and Reward Preferences under Time Pressure*

Cited by 40 publications

References 42 publications

Time pressure and risk taking in auctions: A field experiment

Time pressure and risk taking in auctions: A field experiment

Rapid makes risky: Time pressure increases risk seeking in decisions from experience

The chronometry of risk processing in the human cortex

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