The role of memory in distinguishing risky decisions from experience and description

Madan, Christopher R. and Ludvig, Elliot A. and Spetch, Marcia L. (2016) The role of memory in distinguishing risky decisions from experience and description. Quarterly Journal of Experimental Psychology, 70 (10). pp. 2048-2059. ISSN 1747-0226

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Abstract

People’s risk preferences differ for choices based on described probabilities versus those based on information learned through experience. For decisions from description, people are typically more risk averse for gains than for losses. In contrast, for decisions from experience, people are sometimes more risk seeking for gains than losses, especially for choices with the possibility of extreme outcomes (big wins or big losses), which are systematically overweighed in memory. Using a within-subject design, this study evaluated whether this memory bias plays a role in the differences in risky choice between description and experience. As in previous studies, people were more risk seeking for losses than for gains in description but showed the opposite pattern in experience. People also more readily remembered the extreme outcomes and judged them as having occurred more frequently. These memory biases correlated with risk preferences in decisions from experience but not in decisions from description. These results suggest that systematic memory biases may be responsible for some of the differences in risk preference across description and experience.

Item Type: Article
RIS ID: https://nottingham-repository.worktribe.com/output/818767
Keywords: Decisions from description; Decisions from experience; Decision-making; Description–experience gap; Memory; Risky choice
Schools/Departments: University of Nottingham, UK > Faculty of Science > School of Psychology
Identification Number: https://doi.org/10.1080/17470218.2016.1220608
Depositing User: Madan, Christopher
Date Deposited: 15 Jan 2018 09:22
Last Modified: 04 May 2020 18:13
URI: http://eprints.nottingham.ac.uk/id/eprint/49071

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