Does uncertainty cause inertia in decision making? An experimental study of the role of regret aversion and indecisiveness

Previous research has shown that often there is clear inertia in individual decision making---that is, a tendency for decision makers to choose a status quo option. I conduct a laboratory experiment to investigate two potential determinants of inertia in uncertain environments: (i) regret aversion and (ii) ambiguity-driven indecisiveness. I use a between-subjects design with varying conditions to identify the effects of these two mechanisms on choice behavior. In each condition, participants choose between two simple real gambles, one of which is the status quo option. I find that inertia is quite large and that both mechanisms are equally important.

Do preference reversals generalise? Results on ambiguity and loss aversion

Preference reversals are frequently observed in the lab, but almost all designs use completely transparent prospects, which are rarely features of decision making elsewhere. This raises questions of external validity. We test the robustness of the phenomenon to gambles that incorporate realistic ambiguity in both payoffs and probabilities. In addition, we test a recent explanation of preference reversals by loss aversion, which would also restrict the incidence of reversals outside the lab. According to this account, reversals occur largely because the valuation task endows subject with a gamble, activating loss aversion. This contrasts with the choice task, where the reference point is pre-experiment wealth. We test this explanation by holding the reference point constant. Our evidence suggests that reversals are only slightly diminished with ambiguity. We find no evidence supporting their explanation by loss aversion.

Empirical test of an agricultural landscape model: the importance of farmer preference for risk aversion and crop complexity

Developing models to predict the effects of social and economic change on agricultural landscapes is an important challenge. Model development often involves making decisions about which aspects of the system require detailed description and which are reasonably insensitive to the assumptions. However, important components of the system are often left out because parameter estimates are unavailable. In particular, measurements of the relative influence of different objectives, such as risk, environmental management, on farmer decision making, have proven difficult to quantify. We describe a model that can make predictions of land use on the basis of profit alone or with the inclusion of explicit additional objectives. Importantly, our model is specifically designed to use parameter estimates for additional objectives obtained via farmer interviews. By statistically comparing the outputs of this model with a large farm-level land-use data set, we show that cropping patterns in the United Kingdom contain a significant contribution from farmer’s preference for objectives other than profit. In particular, we found that risk aversion had an effect on the accuracy of model predictions, whereas preference for a particular number of crops grown was less important. While nonprofit objectives have frequently been identified as factors in farmers’ decision making, our results take this analysis further by demonstrating the relationship between these preferences and actual cropping patterns.

Accounting for risk aversion in repeated prisoners’ dilemma games: an experimental test

We apply experimental methods to study the role of risk aversion on players’ behavior in repeated prisoners’ dilemma games. Faced with quantitatively equal discount factors, the most risk-averse players will choose Nash strategies more often in the presence of uncertainty than when future profits are discounted in a deterministic way. Overall, we find that risk aversion relates negatively with the frequency of collusive outcomes.

Opposing neural effects of naltrexone on food reward and aversion: implications for the treatment of obesity

Rationale: Opioid antagonism reduces the consumption of palatable foods in humans but the neural substrates implicated in these effects are less well understood. Objectives: The aim of the present study was to examine the effects of the opioid antagonist, naltrexone, on neural response to rewarding and aversive sight and taste stimuli. Methods: We used functional magnetic resonance imaging (fMRI) to examine the neural responses to the sight and taste of pleasant (chocolate) and aversive (mouldy strawberry) stimuli in 20 healthy volunteers who received a single oral dose of naltrexone (50 mg) and placebo in a double-blind, repeated-measures cross-over, design. Results: Relative to placebo, naltrexone decreased reward activation to chocolate in the dorsal anterior cingulate cortex and caudate, and increased aversive-related activation to unpleasant strawberry in the amygdala and anterior insula. Conclusions: These findings suggest that modulation of key brain areas involved in reward processing, cognitive control and habit formation such as the dorsal anterior cingulate cortex (dACC) and caudate might underlie reduction in food intake with opioid antagonism. Furthermore we show for the first time that naltrexone can increase activations related to aversive food stimuli. These results support further investigation of opioid treatments in obesity.

Risk aversion, overconfidence and private information as determinants of majority thresholds

We present and experimentally test a theoretical model of majority threshold determination as a function of voters’ risk preferences. The experimental results confirm the theoretical prediction of a positive correlation between the voter's risk aversion and the corresponding preferred majority threshold. Furthermore, the experimental results show that a voter's preferred majority threshold negatively relates to the voter's confidence about how others will vote. Moreover, in a treatment in which individuals receive a private signal about others’ voting behaviour, the confidence-related motivation of behaviour loses ground to the signal's strength.

Neural effects of cannabinoid CB1 neutral antagonist tetrahydrocannabivarin (THCv) on food reward and aversion in healthy volunteers

Disturbances in the regulation of reward and aversion in the brain may underlie disorders such as obesity and eating disorders. We previously showed that the cannabis receptor subtype (CB1) inverse agonist rimonabant, an antiobesity drug withdrawn due to depressogenic side effects, diminished neural reward responses yet increased aversive responses (Horder et al., 2010). Unlike rimonabant, tetrahydrocannabivarin is a neutral CB1 receptor antagonist (Pertwee, 2005) and may therefore produce different modulations of the neural reward system. We hypothesized that tetrahydrocannabivarin would, unlike rimonabant, leave intact neural reward responses but augment aversive responses. Methods: We used a within-subject, double-blind design. Twenty healthy volunteers received a single dose of tetrahydrocannabivarin (10mg) and placebo in randomized order on 2 separate occasions. We measured the neural response to rewarding (sight and/or flavor of chocolate) and aversive stimuli (picture of moldy strawberries and/or a less pleasant strawberry taste) using functional magnetic resonance imaging. Volunteers rated pleasantness, intensity, and wanting for each stimulus. Results: There were no significant differences between groups in subjective ratings. However, tetrahydrocannabivarin increased responses to chocolate stimuli in the midbrain, anterior cingulate cortex, caudate, and putamen. Tetrahydrocannabivarin also increased responses to aversive stimuli in the amygdala, insula, mid orbitofrontal cortex, caudate, and putamen. Conclusions: Our findings are the first to show that treatment with the CB1 neutral antagonist tetrahydrocannabivarin increases neural responding to rewarding and aversive stimuli. This effect profile suggests therapeutic activity in obesity, perhaps with a lowered risk of depressive side effects. Keywords: reward, THCv, obesity, fMRI, cannabinoid

Preference reversals for ambiguity aversion

This paper finds preference reversals in measurements of ambiguity aversion, even if psychological and informational circumstances are kept constant. The reversals are of a fundamentally different nature than the reversals found before because they cannot be explained by context-dependent weightings of attributes. We offer an explanation based on Sugden's random-reference theory, with different elicitation methods generating different random reference points. Then measurements of ambiguity aversion that use willingness to pay are confounded by loss aversion and hence overestimate ambiguity aversion.

The effect of accountability on loss aversion.

This paper investigates the effect of accountability-the expectation on the side of the decision maker of having to justify his/her decisions to somebody else-on loss aversion. Loss aversion is commonly thought to be the strongest component of risk aversion. Accountability is found to reduce the bias of loss aversion. This effect is explained by the higher cognitive effort induced by accountability, which triggers a rational check on emotional reactions at the base of loss aversion, leading to a reduction of the latter. Connections to dual-processing models are discussed.

Enhanced neural response to anticipation, effort and consummation of reward and aversion during Bupropion treatment

Background We have previously shown that the selective serotonergic re-uptake inhibitor, citalopram, reduces the neural response to reward and aversion in healthy volunteers. We suggest that this inhibitory effect might underlie the emotional blunting reported by patients on these medications. Bupropion is a dopaminergic and noradrenergic re-uptake inhibitor and has been suggested to have more therapeutic effects on reward-related deficits. However, how bupropion affects the neural responses to reward and aversion is unclear. Methods 17 healthy volunteers (9 female, 8 male) received 7 days of bupropion (150 mg/day) and 7 days of placebo treatment, in a double-blind crossover design. Our functional Magnetic Resonance Imaging task consisted of 3 phases; an anticipatory phase (pleasant or unpleasant cue), an effort phase (button presses to achieve a pleasant taste or to avoid an unpleasant taste) and a consummatory phase (pleasant or unpleasant tastes). Volunteers also rated wanting, pleasantness and intensity of the tastes. Results Relative to placebo, bupropion increased activity during the anticipation phase in the ventral medial prefrontal cortex (vmPFC) and caudate. During the effort phase, bupropion increased activity in the vmPFC, striatum, dorsal anterior cingulate cortex and primary motor cortex. Bupropion also increased medial orbitofrontal cortex, amygdala and ventral striatum activity during the consummatory phase. Conclusions Our results are the first to show that bupropion can increase neural responses during the anticipation, effort and consummation of rewarding and aversive stimuli. This supports the notion that bupropion might be beneficial for depressed patients with reward-related deficits and blunted affect.

Conditioned taste aversion reduces fox depredation on model eggs on beaches

Context:  Conditioned taste aversion (CTA) is induced by an association of a food item with a negative experience, such as illness, which causes animals to avoid subsequent consumption of that particular food item. Inducing CTA may help reduce depredation rates of threatened fauna where predator population control is undesirable, impractical or unsuccessful.

Aims:  We investigated whether CTA could be induced among foxes (Vulpes vulpes) to model eggs which mimicked those of the threatened hooded plover (Thinornis rubricollis).

Methods:   Model eggs treated with a potential CTA-inducing chemical (sodium carbonate) and control eggs free of the agent were exposed to fox depredation for 28 days to simulate a hooded plover incubation period. To investigate whether CTA would persist in wild foxes, we implemented a part-time agent treatment (an initial 14 day exposure period of model eggs with the CTA agent followed by a second 14 day period when model eggs were free of the agent).

Key results:  Similar intervals to the first depredation event were found for all model eggs regardless of treatment. After the first depredation event by foxes, the rate and likelihood of fox depredation was significantly lower in treated eggs than in control eggs. The likelihood or rate of depredation across the three treatments did not differ between the first and second periods.

Conclusions: Our results suggest that during an exposure period of at least 28 days, CTA can be induced in wild foxes to eggs on beaches. Our results also suggest that 14 days may be insufficient time for wild foxes to develop a lasting CTA to familiar food items such as eggs.

Implications:  Treatment of eggs with a CTA-inducing chemical may present a viable alternative to traditional predator control techniques for hooded plovers, as well as other ground-nesting birds, provided that an extended exposure to the CTAinducing agent occurs.