Australasian Mathematical Psychology Conference 2019

Rarity vs. extremity and the effect of task complexity in decisions from experience.

Yonatan Vanunu
School of Psychology, University of New South Wales
Emmanouil Konstantinidis
University of Leeds
Ben R. Newell
University of New South Wales

When faced with repeated choices between safe options and risky gambles people often choose as if they underweight rare outcomes, relative to a normative prescription. However, some recent studies have shown that when controlling for rarity and expected value, extreme events (i.e. values at the edge of the distribution) are better remembered and sometimes overweighted in choice. In two experiments, we tested these two features of choice situations – rarity and extremity – against each other within a decisions-from-experience paradigm in which we manipulated the complexity of the choice facing participants. The results suggested that the rarity of an outcome had a greater influence on choice than its extremity. Nonetheless, this trend diminished as a function of task-complexity (i.e., increasing the number of discrete outcomes participants needed to track). A third experiment attempted to distinguish between two plausible explanations of the complexity effect: a) a causal link between source-memory demands and overweighting the extremes, and b) an increase in random choice that manifested as a regression to chance-level responding (i.e., no preference). The results indicated some support for a regression to chance level under higher task complexity, however, there was also evidence of short-term sequential effects (i.e., the timing and frequency of experiencing rare and extreme events) contributing to overall higher choice variability in the more complex task. The implications of these results for theories and models of experience-based risky choice will be briefly discussed.