We examine two departures of individual perceptions of randomness from probability theory: the hot hand and the gambler's fallacy, and their respective opposites. This paper's first contribution is to use data from the field (individuals playing roulette in a casino) to demonstrate the existence and impact of these biases that have been previously documented in the lab. Decisions in the field are consistent with biased beliefs, although we observe significant individual heterogeneity in the population. A second contribution is to separately identify these biases within a given individual, then to examine their within-person correlation. We find a positive and significant correlation across individuals between hot hand and gambler's fallacy biases, suggesting a common (root) cause of the two related errors. We speculate as to the source of this correlation (locus of control), and suggest future research which could test this speculation.

In a series of recent experiments (Davis, Millner and Reilly, 2005, Eckel and Grossman, 2003, 2005a-c, 2006), matching subsidies generate significantly higher charity receipts than do theoretically equivalent rebate subsidies. This paper reports a laboratory experiment conducted to examine whether the higher receipts are attributable to a relative preference for matching subsidies or to an “isolation effect” (McCaffery and Baron, 2003, 2006). Some potential policy implications of isolation effects on charitable contributions are also considered.

The principle of loss aversion is thought to explain a wide range of anomalous phenomena involving tradeoffs between losses and gains. In this article, I show that the anomalies loss aversion was introduced to explain - the risky bet premium, the endowment effect, and the status-quo bias - are characterized not only by a loss/gain tradeoff, but by a tradeoff between the status-quo and change; and, that a propensity towards the status-quo in the latter tradeoff is sufficient to explain these phenomena. Moreover, I show that two basic psychological principles - (1) that motives drive behavior; and (2) that preferences tend to be fuzzy and ill-defined - imply the existence of a robust and fundamental propensity of this sort. Thus, a loss aversion principle is rendered superfluous to an account of the phenomena it was introduced to explain.

This paper proposes a revised version of the original Domain-Specific Risk-Taking (DOSPERT) scale developed by Weber, Blais, and Betz (2002) that is shorter and applicable to a {broader range of ages, cultures, and educational levels}. It also provides a French translation of the revised scale. Using multilevel modeling, we investigated the risk-return relationship between apparent risk taking and risk perception in 5 risk domains. The results replicate previously noted differences in reported degree of risk taking and risk perception at the mean level of analysis. The multilevel modeling shows, more interestingly, that within-participants variation in risk taking across the 5 content domains of the scale was about 7 times as large as between-participants variation. We discuss the implications of our findings in terms of the person-situation debate related to risk attitude as a stable trait.

Across many real-world domains, men engage in more risky behaviors than do women. To examine some of the beliefs and preferences that underlie this difference, 657 participants assessed their likelihood of engaging in various risky activities relating to four different domains (gambling, health, recreation, and social), and reported their perceptions of (1) probability of negative outcomes, (2) severity of potential negative outcomes, and (3) enjoyment expected from the risky activities. Women’s greater perceived likelihood of negative outcomes and lesser expectation of enjoyment partially mediated their lower propensity toward risky choices in gambling, recreation, and health domains. Perceptions of severity of potential outcomes was a partial mediator in the gambling and health domains. The genders did not differ in their propensity towards taking social risks. A fifth domain of activities associated with high potential payoffs and fixed minor costs was also assessed. In contrast to other domains, women reported being more likely to engage in behaviors in this domain. This gender difference was partially mediated by women’s more optimistic judgments of the probability of good outcomes and of outcomes being more intensely positive.

Imagine that you have just received a colon cancer diagnosis and need to choose between two different surgical treatments. One surgery, the "complicated surgery," has a lower mortality rate (16% vs. 20%) but compared to the other surgery, the "uncomplicated surgery," also carries an additional 1% risk of each of four serious complications: colostomy, chronic diarrhea, wound infection, or an intermittent bowel obstruction. The complicated surgery dominates the uncomplicated surgery as long as life with complications is preferred over death.

In our first survey, 51% of a sample (recruited from the cafeteria of a university medical center) selected the dominated alternative, the uncomplicated surgery, justifying this choice by saying that the death risks for the two surgeries were essentially the same and that the uncomplicated surgery avoided the risk of complications. In follow-up surveys, preference for the uncomplicated surgery remained relatively consistent (39%-51%) despite (a) presenting the risks in frequencies rather than percents, (b) grouping the 4 complications into a single category, or (c) giving the uncomplicated surgery a small chance of complications as well. Even when a pre-decision "focusing exercise" required people to state directly their preferences between life with each complication versus death, 49% still chose the uncomplicated surgery.

People’s fear of complications leads them to ignore important differences between treatments. This tendency appears remarkably resistant to debiasing approaches and likely leads patients to make healthcare decisions that are inconsistent with their own preferences.

One of the largest reasons decision-makers make bad decisions (act imprudently) is that the world is full of uncertainty, we feel uncertain about the consequences of our actions. Participants played a repeated game in which decisions were made under various types of uncertainty (either no uncertainty, uncertainty about the present consequences of behaviors, uncertainty about the future consequences of behavior, or both types of uncertainty). The game required prudent decision making for success. While playing the game one of three types of feedback was placed between trials, either no feedback, behavioral feedback, or behavioral plus outcome feedback. Prudent decision-making decreased when both types of uncertainty were added. Further, the addition of feedback increased prudent decision-making when future uncertainty was present. The increase in prudent decisions appears to be from feedback’s ability to allow us to create probabilities associated with behaviors and their consequences, implying that anything that reduces the uncertainty people feel in a world full of uncertainty will increase their ability to make prudent decisions.

This paper extends previous research showing that experienced difficulty of recall can influence evaluative judgments (e.g., Winkielman & Schwarz, 2001) to a field study of university students rating a course. Students completed a mid-course evaluation form in which they were asked to list either 2 ways in which the course could be improved (a relatively easy task) or 10 ways in which the course could be improved (a relatively difficult task). Respondents who had been asked for 10 critical comments subsequently rated the course more favorably than respondents who had been asked for 2 critical comments. An internal analysis suggests that the number of critiques solicited provides a frame against which accessibility of instances is evaluated. The paper concludes with a discussion of implications of the present results and possible directions for future research.