The role of information search and its influence on risk preferences

According to the ‘Description–Experience gap’ (DE gap), when people are provided with the descriptions of risky prospects they make choices as if they overweight the probability of rare events; but when making decisions from experience after exploring the prospects’ properties, they behave as if they underweight such probability. This study revisits this discrepancy while focusing on information-search in decisions from experience. We report findings from a lab-experiment with three treatments: a standard version of decisions from description and two versions of decisions from experience: with and without a ‘history table’ recording previously sampled events. We find that people sample more from lotteries with rarer events. The history table proved influential; in its absence search is more responsive to cues such as a lottery’s variance while in its presence the cue that stands out is the table’s maximum capacity. Our analysis of risky choices captures a significant DE gap which is mitigated by the presence of the history table. We elicit probability weighting functions at the individual level and report that subjects overweight rare events in experience but less so than in description. Finally, we report a measure that allows us to compare the type of DE gap found in studies using choice patterns with that inferred through valuation and find that the phenomenon is similar but not identical across the two methods

Measuring loss aversion under ambiguity: a method to make prospect theory completely observable

We propose a simple, parameter-free method that, for the first time, makes it possible to completely observe Tversky and Kahneman’s (1992) prospect theory. While methods exist to measure event weighting and the utility for gains and losses separately, there was no method to measure loss aversion under ambiguity. Our method allows this and thereby it can measure prospect theory’s entire utility function. Consequently, we can properly identify properties of utility and perform new tests of prospect theory. We implemented our method in an experiment and obtained support for prospect theory. Utility was concave for gains and convex for losses and there was substantial loss aversion. Both utility and loss aversion were the same for risk and ambiguity, as assumed by prospect theory, and sign-comonotonic trade-off consistency, the central condition of prospect theory, held

The association of genetic predisposition to depressive symptoms with non-suicidal and suicidal self-Injuries

Non-suicidal and suicidal self-injury are very destructive, yet surprisingly common behaviours. Depressed mood is a major risk factor for non-suicidal self-injury (NSSI), suicidal ideation and suicide attempts. We conducted a genetic risk prediction study to examine the polygenic overlap of depressive symptoms with lifetime NSSI, suicidal ideation, and suicide attempts in a sample of 6237 Australian adult twins and their family members (3740 females, mean age\ua0=\ua042.4\ua0years). Polygenic risk scores for depressive symptoms significantly predicted suicidal ideation, and some predictive ability was found for suicide attempts; the polygenic risk scores explained a significant amount of variance in suicidal ideation (lowest p\ua0=\ua00.008, explained variance ranging from 0.10 to 0.16\ua0%) and, less consistently, in suicide attempts (lowest p\ua0=\ua00.04, explained variance ranging from 0.12 to 0.23\ua0%). Polygenic risk scores did not significantly predict NSSI. Results highlight that individuals genetically predisposed to depression are also more likely to experience suicidal ideation/behaviour, whereas we found no evidence that this is also the case for NSSI

Beware of black swans: Taking stock of the description–experience gap in decision under uncertainty

Uncertainty pervades most aspects of life. From selecting a new technology to choosing a career, decision makers rarely know in advance the exact outcomes of their decisions. Whereas the consequences of decisions in standard decision theory are explicitly described (the decision from description (DFD) paradigm), the consequences of decisions in the recent decision from experience (DFE) paradigm are learned from experience. In DFD, decision makers typically overrespond to rare events. That is, rare events have more impact on decisions than their objective probabilities warrant (overweighting). In DFE, decision makers typically exhibit the opposite pattern, underresponding to rare events. That is, rare events may have less impact on decisions than their objective probabilities warrant (underweighting). In extreme cases, rare events are completely neglected, a pattern known as the “Black Swan effect.” This contrast between DFD and DFE is known as a description–experience gap. In this paper, we discuss several tentative interpretations arising from our interdisciplinary examination of this gap. First, while a source of underweighting of rare events in DFE may be sampling error, we observe that a robust description–experience gap remains when these factors are not at play. Second, the residual description–experience gap is not only about experience per se but also about the way in which information concerning the probability distribution over the outcomes is learned in DFE. Econometric error theories may reveal that different assumed error structures in DFD and DFE also contribute to the gap

COP21 climate negotiators' responses to climate model forecasts

Policymakers involved in climate change negotiations are key users of climate science. It is therefore vital to understand how to communicate scientific information most effectively to this group. We tested how a unique sample of policymakers and negotiators at the Paris COP21 conference update their beliefs on year 2100 global mean temperature increases in response to a statistical summary of climate models' forecasts. We randomized the way information was provided across participants using three different formats similar to those used in Intergovernmental Panel on Climate Change reports. In spite of having received all available relevant scientific information, policymakers adopted such information very conservatively, assigning it less weight than their own prior beliefs. However, providing individual model estimates in addition to the statistical range was more effective in mitigating such inertia. The experiment was repeated with a population of European MBA students who, despite starting from similar priors, reported conditional probabilities closer to the provided models' forecasts than policymakers. There was also no effect of presentation format in the MBA sample. These results highlight the importance of testing visualization tools directly on the population of interest

Information and ambiguity: herd and contrarian behaviour in financial markets

“The final publication is available at Springer via http://dx.doi.org/10.1007/s11238-012-9334-3”The paper studies the impact of informational ambiguity on behalf of informed traders on history-dependent price behaviour in a model of sequential trading in nancial markets. Following Chateauneuf, Eichberger and Grant (2006), we use neo-additive capacities to model ambiguity. Such ambiguity and attitudes to it can engender herd and contrarian behaviour, and also cause the market to break down. The latter, herd and contrarian behaviour, can be reduced by the existence of a bid-ask spread.Research in part funded by ESRC grant RES-000-22-0650

Dose response of the 16p11.2 distal copy number variant on intracranial volume and basal ganglia.

Carriers of large recurrent copy number variants (CNVs) have a higher risk of developing neurodevelopmental disorders. The 16p11.2 distal CNV predisposes carriers to e.g., autism spectrum disorder and schizophrenia. We compared subcortical brain volumes of 12 16p11.2 distal deletion and 12 duplication carriers to 6882 non-carriers from the large-scale brain Magnetic Resonance Imaging collaboration, ENIGMA-CNV. After stringent CNV calling procedures, and standardized FreeSurfer image analysis, we found negative dose-response associations with copy number on intracranial volume and on regional caudate, pallidum and putamen volumes (β = -0.71 to -1.37; P < 0.0005). In an independent sample, consistent results were obtained, with significant effects in the pallidum (β = -0.95, P = 0.0042). The two data sets combined showed significant negative dose-response for the accumbens, caudate, pallidum, putamen and ICV (P = 0.0032, 8.9 × 10-6, 1.7 × 10-9, 3.5 × 10-12 and 1.0 × 10-4, respectively). Full scale IQ was lower in both deletion and duplication carriers compared to non-carriers. This is the first brain MRI study of the impact of the 16p11.2 distal CNV, and we demonstrate a specific effect on subcortical brain structures, suggesting a neuropathological pattern underlying the neurodevelopmental syndromes