Inducing Alternative-Based and Characteristic-Based Search Procedures in Risky Choice

Luigi Mittone; Mauro Papi

Inducing Alternative-Based and Characteristic-Based Search Procedures in Risky Choice

Luigi Mittone, Mauro Papi^*

^*Corresponding author for this work

Economics

University of Trento

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

7 Downloads (Pure)

Abstract

We propose a novel experimental design aimed at investigating whether inducing individuals to use certain choice procedures has an effect on the outcome of their decision. Specifically, by implementing a modification of the mouse-tracing method, we induce subjects to use either alternative-based or characteristic-based search procedures in a between-subject lottery-choice experiment. We find that encouraging subjects to search by characteristic systematically makes them choose riskier options. Consistently with existing literature, our evidence indicates that individuals typically look up information within alternatives. However, when induced to search by characteristic, high prizes receive more attention, leading individuals to switch to noncompensatory heuristics and – consequently – make riskier choices. Our findings are robust to variations in the complexity of the choice problem and individual differences in risk-attitudes, CRT scores, and gender.

Original language	English
Pages (from-to)	371-380
Number of pages	10
Journal	Judgment and Decision Making
Volume	15
Issue number	3
Publication status	Published - 31 May 2020

Bibliographical note

We would like to thank an Editor of this journal, two referees, Ramses H. Abul Naga, Santiago Sanchez-Pages, and Martin Wersing for helpful suggestions. We are grateful to the seminar audiences at the universities of Aberdeen, East Anglia, and Trento, and the participants to the Workshop on Economics of Competition, Regulation, and Consumer Protection (Glasgow), the 43rd Symposium of the Spanish Economic Association (Madrid), the 2018 ESA World Meeting (Berlin), the 2017 IAREP Conference on ‘Leveraging Behavioral Insights’ (Tel Aviv) and the 11th IMPRS Workshop on ‘Adapting Behavior in a Fundamentally Uncertain World’ (Trento) for their comments. We also thank Marco Tecilla for great computer programming and Erika Magnago for superb research assistance. Financial support from Aberdeen and Trento’s core funding is gratefully acknowledged. An earlier version of this paper was circulated under the title: ‘You Dislike Risk? Then Do Not Search By Characteristic: A Lottery-Choice Experiment’. Any error is our own responsibility.

http://journal.sjdm.org/copyright.htm

Keywords

Alternative-Based Search
Characteristic-Based Search
Risky Choice
Alternative-based search
Characteristic-based search
Risky choice

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http://journal.sjdm.org/vol15.3.htmlLicence: CC BY

Cite this

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title = "Inducing Alternative-Based and Characteristic-Based Search Procedures in Risky Choice",

abstract = "We propose a novel experimental design aimed at investigating whether inducing individuals to use certain choice procedures has an effect on the outcome of their decision. Specifically, by implementing a modification of the mouse-tracing method, we induce subjects to use either alternative-based or characteristic-based search procedures in a between-subject lottery-choice experiment. We find that encouraging subjects to search by characteristic systematically makes them choose riskier options. Consistently with existing literature, our evidence indicates that individuals typically look up information within alternatives. However, when induced to search by characteristic, high prizes receive more attention, leading individuals to switch to noncompensatory heuristics and – consequently – make riskier choices. Our findings are robust to variations in the complexity of the choice problem and individual differences in risk-attitudes, CRT scores, and gender.",

keywords = "Alternative-Based Search, Characteristic-Based Search, Risky Choice, Alternative-based search, Characteristic-based search, Risky choice",

author = "Luigi Mittone and Mauro Papi",

note = "We would like to thank an Editor of this journal, two referees, Ramses H. Abul Naga, Santiago Sanchez-Pages, and Martin Wersing for helpful suggestions. We are grateful to the seminar audiences at the universities of Aberdeen, East Anglia, and Trento, and the participants to the Workshop on Economics of Competition, Regulation, and Consumer Protection (Glasgow), the 43rd Symposium of the Spanish Economic Association (Madrid), the 2018 ESA World Meeting (Berlin), the 2017 IAREP Conference on {\textquoteleft}Leveraging Behavioral Insights{\textquoteright} (Tel Aviv) and the 11th IMPRS Workshop on {\textquoteleft}Adapting Behavior in a Fundamentally Uncertain World{\textquoteright} (Trento) for their comments. We also thank Marco Tecilla for great computer programming and Erika Magnago for superb research assistance. Financial support from Aberdeen and Trento{\textquoteright}s core funding is gratefully acknowledged. An earlier version of this paper was circulated under the title: {\textquoteleft}You Dislike Risk? Then Do Not Search By Characteristic: A Lottery-Choice Experiment{\textquoteright}. Any error is our own responsibility. http://journal.sjdm.org/copyright.htm",

year = "2020",

month = may,

day = "31",

language = "English",

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pages = "371--380",

journal = "Judgment and Decision Making",

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PY - 2020/5/31

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N2 - We propose a novel experimental design aimed at investigating whether inducing individuals to use certain choice procedures has an effect on the outcome of their decision. Specifically, by implementing a modification of the mouse-tracing method, we induce subjects to use either alternative-based or characteristic-based search procedures in a between-subject lottery-choice experiment. We find that encouraging subjects to search by characteristic systematically makes them choose riskier options. Consistently with existing literature, our evidence indicates that individuals typically look up information within alternatives. However, when induced to search by characteristic, high prizes receive more attention, leading individuals to switch to noncompensatory heuristics and – consequently – make riskier choices. Our findings are robust to variations in the complexity of the choice problem and individual differences in risk-attitudes, CRT scores, and gender.

AB - We propose a novel experimental design aimed at investigating whether inducing individuals to use certain choice procedures has an effect on the outcome of their decision. Specifically, by implementing a modification of the mouse-tracing method, we induce subjects to use either alternative-based or characteristic-based search procedures in a between-subject lottery-choice experiment. We find that encouraging subjects to search by characteristic systematically makes them choose riskier options. Consistently with existing literature, our evidence indicates that individuals typically look up information within alternatives. However, when induced to search by characteristic, high prizes receive more attention, leading individuals to switch to noncompensatory heuristics and – consequently – make riskier choices. Our findings are robust to variations in the complexity of the choice problem and individual differences in risk-attitudes, CRT scores, and gender.

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Inducing Alternative-Based and Characteristic-Based Search Procedures in Risky Choice

Abstract

Bibliographical note

Keywords

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Mauro Papi

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Inducing Alternative-Based and Characteristic-Based Search Procedures in Risky Choice

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Bibliographical note

Keywords

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Mauro Papi

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