Win Some, Lose Some: The Effect of Chronic Losses on Decision Making Under Risk
Losses, including those that are chronic in nature, are a fact of life. The research reported here was designed to examine, using a controlled experiment, the effect of chronic losses in a given contextual domain on subsequent decisions with uncertain outcomes that take place in the same and in unrelated domains. Randomly selected adult subjects who took part in the experiment were randomly assigned to one of three treatment groups: One group, chronic losers, was exposed to chronic financial losses as part of a controlled, multi-round gambling simulation. Groups two and three were exposed to chronic wins and random outcomes, respectively, as part of the same gambling simulation. Results from the experiment revealed that chronic losses, in contrast to random outcomes and chronic wins, had clear effects on decision making in the domain where the initial losses were incurred. Subjects who were exposed to the chronic loss induction demonstrated a significantly higher level of risk aversion when compared with subjects who were exposed to either random outcomes or chronic wins. Subjects exposed to chronic losses also displayed a depressed affective state and a tendency to accept less as an outcome of future decisions, and still consider it to be a satisfactory result, when compared to subjects in the two control conditions. There appears to be no spillover, however, of a similar degree of risk aversion when considering similar kinds of decisions in unrelated contextual domains. These results seem consistent with prospect theory and the theory of learned helplessness, and have implications for risk communication and management in a variety of contexts.
Year of publication: |
2007
|
---|---|
Authors: | Rivers, Louie ; Arvai, Joseph |
Published in: |
Journal of Risk Research. - Taylor & Francis Journals, ISSN 1366-9877. - Vol. 10.2007, 8, p. 1085-1099
|
Publisher: |
Taylor & Francis Journals |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Rivers, Louie, (2010)
-
Gibbs, Carole, (2015)
-
The New Global Urban Realm: Complex, Connected, Diffuse, and Diverse Social-Ecological Systems
McHale, Melissa R., (2015)
- More ...