Living near the edge: how extreme outcomes and their neighbours drive risky choice

Ludvig, Elliot A. and Madan, Christopher R. and McMillan, Neil and Xu, Yaqian and Spetch, Marcia L. (2018) Living near the edge: how extreme outcomes and their neighbours drive risky choice. Journal of Experimental Psychology: General . ISSN 1939-2222

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Abstract

Extreme stimuli are often more salient in perception and memory than moderate stimuli. In risky choice, when people learn the odds and outcomes from experience, the extreme outcomes (best and worst) also stand out. This additional salience leads to more risk-seeking for relative gains than for relative losses—the opposite of what people do when queried in terms of explicit probabilities. Previous research has suggested that this pattern arises because the most extreme experienced outcomes are more prominent in memory. An important open question, however, is what makes these extreme outcomes more prominent? Here we assess whether extreme outcomes stand out because they fall at the edges of the experienced outcome distributions or because they are distinct from other outcomes. Across four experiments, proximity to the edge determined what was treated as extreme: Outcomes at or near the edge of the outcome distribution were both better remembered and more heavily weighted in choice. This prominence did not depend on two metrics of distinctiveness: lower frequency or distance from other outcomes. This finding adds to evidence from other domains that the values at the edges of a distribution have a special role.

Item Type: Article
Additional Information: ©2018 American Psychological Association. This paper is not the copy of record and may not exactly replicate the authoritative document published in the APA journal. Please do not copy or cite without author's permission. The final article is available, upon publication, at: http://dx.doi.org/10.1037/xge0000414
Keywords: risky choice; decision making; memory; extreme outcomes; edge effects; end values
Schools/Departments: University of Nottingham, UK > Faculty of Science > School of Psychology
Identification Number: https://doi.org/10.1037/xge0000414
Depositing User: Madan, Christopher
Date Deposited: 25 Jan 2018 13:42
Last Modified: 10 Apr 2018 15:43
URI: http://eprints.nottingham.ac.uk/id/eprint/49328

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