Not lost in translation: Successfully replicating Prospect Theory in 19 countries

Abstract

Kahneman and Tversky’s 1979 article on Prospect Theory is one of the most influential papers across all of the behavioural sciences. The study tested a series of binary financial (risky) choices, ultimately concluding that judgments formed under uncertainty deviate significantly from those presumed by expected utility theory, which was the prevailing theoretical construct at the time. In the forty years since publication, this study has had a remarkable impact on science, policy, and other real-world applications. At the same time, a number of critiques have been raised about its conclusions and subsequent constructs that were founded on it, such as loss aversion. In an era where such presumed canonical theories have increasingly drawn scrutiny for inability to replicate, we attempted a multinational study of N = 4,099 participants from 19 countries and 13 languages. The same methods and procedures were used as in the original paper, adjusting only currencies to make them relative to current values, and requiring all participants to respond to all items. Overall, we found that results replicated for 94% of the 17 choice items tested. At most, results from the 1979 study were attenuated in our findings, which is most likely due to a more robust sample. Twelve of the 13 theoretical contrasts presented by Kahneman and Tversky also replicated, with a further 89% replication rate of the total contrasts possible when separating by location, up to 100% replication in some countries. We conclude that the principles of Prospect Theory replicate beyond any reasonable thresholds, and provide a number of important insights about replications, attenuation, and implications for the study of human decision-making at population-level.

The globalizability of temporal discounting

“…However, multiple binary choice comparisons are ideal for demonstrating multidimensional choice patterns, such as is found with prospect theory, expected utility, and other choice paradoxes or cognitive biases. They are also better suited for testing in multiple countries (26,27) when multiple small adaptations to values in different currencies are necessary. Taking this into consideration, our method leveraged one of the most widely cited papers on decision-making (23), which proposed four critical intertemporal choice anomalies.…”

Reliability of Decision-Making and Reinforcement Learning Computational Parameters

“…The mean loss and risk aversion parameters observed are consistent with previous literature indicating that losses are weighed about twice as much as gains, and that people are on average risk averse (28,30,32,40). Indeed, prospect theory models have shown to be highly replicable across different contexts (39). This implementation of the gambling task may therefore represent a case where group-average results are highly reproducible but the task is also suitable to assess individual differences.…”

“…Prospect theory models, on the other hand, describe the cognitive processes driving decisionmaking biases under known risks, and have been extremely influential in understanding economic decision-making (28,30,32,39,40). These processes are often examined by asking participants to choose between a guaranteed outcome (e.g., £0 gain) and a 50% gamble with two possible outcomes (e.g., £30 gain or £10 loss).…”

Intuitive Expertise in Moral Judgements

“…was modified to highlight the moral dimension of the scenario. The effect found in the original study was large-Program A was favoured by 72% of the participants when framed in terms of saving, as compared to 22% when framed in terms of dying-and it was also found to be highly robust (see, for example, Ruggeri et al [2019], who replicated effects of this kind in nineteen countries). Since the two framings are identical in all morally relevant aspects, an effect of this kind would clearly indicate biased moral judgements.…”