Veronika Zilker: "Attentional foundations of decision making under risk and uncertainty"

Veronika Zilker, Catholic University of Eichstätt-Ingolstadt: "Attentional foundations of decision making under risk and uncertainty"

Abstract
When making decisions under risk, people often systematically deviate from maximizing expected utility. Cumulative prospect theory (CPT) accounts for key violations of utility maximization in decision making under risk (e.g., certainty effect, fourfold pattern of risk attitudes) in terms of a nonlinear probability weighting function, which describes the impact of risky outcomes on preferences in terms of a nonlinear transformation of their objective probabilities. However, it is unclear how specific shapes of the probability weighting function come about on the level of cognitive processing. In the first part of this talk I will show that distortions in probability weighting can arise from simple option-specific attentional biases in information search. This is demonstrated based on simulations and in analyses of empirical data. Further evidence indicates that these effects of attention allocation on probability weighting and risk preferences are causal. In the second part of the talk I turn to a prominent phenomenon in risky choice: the description-experience gap. When making decisions under risk, people can either learn about the options by consulting abstract descriptions of their outcomes and probabilities (decisions from description) or by repeatedly sampling their outcome distributions (decisions from experience). Even when presenting the exact same choice problem in these two modes of learning, people make systematically different choices and they seem to weight probabilities systematically differently. I will demonstrate how we can use our new insight, that patterns in probability weighting can emerge due to systematic attentional biases, to explain the emergence of this description-experience gap.