The description–experience gap in risky choice

Abstract

According to a common conception in behavioral decision research, two cognitive processes-overestimation and overweighting-operate to increase the impact of rare events on people's choices. Supportive findings stem primarily from investigations in which people learn about options via descriptions thereof. Recently, a number of researchers have begun to investigate risky choice in settings in which people learn about options by experiential sampling over time. This article reviews work across three experiential paradigms. Converging findings show that when people make decisions based on experience, rare events tend to have less impact than they deserve according to their objective probabilities. Striking similarities in human and animal experience-based choices, ways of modeling these choices, and their implications for risk and precautionary behavior are discussed.

Fear shapes information acquisition in decisions from experience

“…Several experimental paradigms have been used to investigate decisions from experience (see Hertwig & Erev, 2009). We rely on one of the most commonly used ones, the ''sampling paradigm'' (for details, see Hertwig et al, 2004).…”

“…Only after sampling as many outcomes as they like do participants decide on one of the payoff distributions and make a final consequential (i.e., incentivized) choice. The sampling paradigm represents a class of ecologies in which exploration and exploitation 2 are separate (Hertwig & Erev, 2009). Exploration unfolds during the sampling phase, and exploitation occurs at the moment of the final choice.…”

How choice ecology influences search in decisions from experience

“…Decisions from experience have been studied based on several experimental paradigms (Hertwig & Erev, 2009). We will focus on the sampling paradigm.…”

“…This final decision can then be compared to those reached when the same options are described explicitly. Across different experimental paradigms, a robust and systematic gap between experience-and description-based choices has emerged (see Hertwig & Erev, 2009), for a review). It can be summarized as follows: In decisions from experience, people behave as if the rare events have less impact than they deserve according to their objective probabilities, whereas in decisions from description people behave as if the rare events have more impact than they deserve (Kahneman & Tversky, 1979; also see Ludvig & Spetch, 2011), for a demonstration of the description-experience gap beyond rare events).…”

“…To investigate such decisions from description, researchers have devised ingenious methods (e.g., Willemsen & Johnson, 2010) to make observable what little is left of cognitive search. With the recent advent of investigations of what has been termed the description-experience gap in risky choice (see Hertwig & Erev, 2009), however, search has been moved to the center of scientific interest.…”