Gain, cost, and event probability as determiners of choice behavior

Abstract

Differential gain, cost, and event probability were varied in a two-choice situation . Increases in the gain associated with a correct response, increases in the probability of being correct, and decreases in the cost of an incorrect response all result in increases in the probability of that response. Gain had a greater effect than cost, but both variables became less effective as event probability inc reased. Changes in these relationships were noted as a function of trials.' IntroductionThe present study was designed to investigate the effects of differential gains and costs in a two-choice situation. "Differential" means that the gain resulting from a correct de cision was a function of which choice had been made ; similarly, the cost of an incorrect choice depended upon the choice. The resultsofstudiesof·differ-entiaI'gains (Edwards, 1956; and of differential gains and costs suggest that the asymptotic probability of making the response with the highest expected value (EV) is correlated with the difference in expected values (t.EV) associated with the two responses. The acceptance of this conclusion must be qualified by noting that none of these investigations involved more than 150 trials. In a more recent experiment, with more trials and equal event probabilities, Katz (1964) investigated the effects of nine different costgain combinations. He concluded that the t.EV rule does not account for the rank ordering of choice probabilities across conditions. The present study extends Katz's research to two additional levels of event probability, and should therefore test the gene rality of his findings regarding gain-cost combinations. MethodThe probability of the more frequent event (rr),andgain

Cognitive Models of Choice: Comparing Decision Field Theory to the Proportional Difference Model

“…Therefore, we used three sets of 60 gambles for which the outcome probabilities remained constant and then estimated the parameters separately for each set. This procedure resembles the experiments of Katz (1964) and Myers and Suydam (1964). In these studies, participants learned about the lotteries over many trials (e.g., 400 in Katz’s experiment), so maybe sets of 60 gambles might not have been enough for them to settle on the strategy proposed by PD.…”

From recurrent choice to skill learning: A reinforcement-learning model.

“…The results were in general consistent with the predictions based on expected payoffs: Partic- ipants chose Alternative 1 more often in all but the condition in which p(1) ϭ .60, G ϭ 1, and L ϭ 4, and the magnitude of choice proportions was in the predicted order: (G ϭ 4, L ϭ 1) Ͼ (G ϭ 4, L ϭ 4) Ͼ (G ϭ 1, L ϭ 1) Ͼ (G ϭ 1, L ϭ 4). Myers and Suydam (1964) found a significant G ϫ L interaction. Specifically, increases in L had a larger effect when G ϭ 1 than when G ϭ 4.…”

“…The fit is also similar to that obtained by Lovett (1998). However, because the model by Lovett combined event probabilities and amount of reward into a single parameter, it has trouble fitting the data set by Myers and Suydam (1964), which we discuss shortly. Figure 3c provides an illustration of the changes in the values that are behind these predictions.…”

“…However, one can also make payoffs contingent on which action is predicted. One such example is the study by Myers and Suydam (1964), which was also chosen as a benchmark test for the models by Busemeyer and Townsend (1993) and Gonzalez-Vallejo (2002). Myers and Suydam's experiment provides further evidence that a successful choice model must be sensitive to the probabilities and magnitudes of reward separately.…”

The Negativity Effect in Interaction It's All in Your Point of View

“…The evaluation of risks and risk-taking behavior also evidence negativity effects. The potential costs (negative attributes) are weighted more heavily than the potential rewards (positive attributes) of a given choice (Kogan & Wallach, 1967), a result that has been found in studies of subjects ranging from ethical risk-taking (Birnbaum, 1972;Rettig & Pasamanick, 1964;Rettig & Rawson, 1963;Rettig & Sinha, 1966) to gambling (Atthowe, 1960;Katz, 1964;Myers, Reilly, & Taub, 1961;Myers & Suydam, 1964;Myers, Suydam, & Gambino, 1965;Slovic & Lichtenstein, 1968). That negative information is weighted more heav-ily than comparable positive information when one forms an evaluation of social actors, objects, or events is well established.…”