New methods were developed for studying risky decision making in children as young as age five. Each child was given a block of 'gain' trials, for example, a choice between a sure gain of one prize and a 50:50 chance of gaining either two prizes or no prize, and a block of 'loss' trials, for example, a choice between a sure loss of one prize and a 50:50 chance of losing either two prizes or no prize. We were thus able to compare risky choice for gains and losses at the level of the individual child. In each of two experiments a variety of individual difference variables were measured, including in Experiment 2, the child's parent's scores on the same task. Across experiments, the preponderance of choices was of the risky option. However, most children and adults made more risky choices in the domain of losses than in the domain of gains. Predictors of individual differences in children included shyness, impulsivity, and the risk taking of the child's parent. We suggest that methods are now in place to encourage further studies of decision processes in young children. Copyright # 2003 John Wiley & Sons, Ltd. key words children's decision making; risky choice; individual differencesThe vast majority of research in decision making has been conducted with adults rather than children. Controlled studies leading to the development of descriptive models of decision making are plentiful with adults because of their ability to understand instructions and tasks, as well as the underlying concepts such as risk and probability. Adults can also readily express their choices and perhaps even the reasons behind them. Nevertheless, large individual differences have been observed in response to decision tasks beyond the overall effects observed with aggregate data. A question addressed by the present research with children is whether the sources of such individual differences can be uncovered at an early age.Recent research has revealed that significant variance in observed decision biases can be accounted for by measures of cognitive ability, personality, and rationality (Lauriola & Levin, 2001;Levin et al., 2002;Stanovich, 1999;Stanovich & West, 1998 normative theory can be attributed to cognitive or computational limitations. A parallel question is how such deviations relate to individual differences in personality and temperament that serve as moderators of affective reactions to different choice situations. A contention of the present investigation is that studies with children, whose cognitive and emotional development are still in progress and thus highly variable, offer great promise for better understanding of the bases for various decision biases. In this study we focus on preference shifts in risky choice: the tendency to make more risky choices to avoid losses than to achieve gains of the same magnitude.We address the dual questions of whether the effects observed with adults can also be detected in young children, and whether links between trait variables and risky choice exist at early stages of developme...

In a 3-year follow-up to Levin and Hart's (2003) study, we observed the same children, now 9-11 years old, and their parents in the same risky decision-making task. At the aggregate level the same pattern of means was observed across time periods. At the individual level the key variables were significantly correlated across time periods for both children and adults. Taken together with the results from the original study and earlier studies, these results solidify the following conclusions: children utilize both probability and outcome information in risky decision-making; the tendency to make more risky choices to avoid a loss than to achieve a gain of equal magnitude, which is a major tenet of the leading theories of risky decision-making, occurs for children as well as adults; children make more risky choices than adults; temperamental predictors of risky choice are valid for children as well as for adults.

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