The impact of the certainty context on the process of choice

John Dickhaut, Kevin McCabe, Jennifer C. Nagode, Aldo Rustichini, Kip Smithll, José V. Pardo

Research output: Contribution to journalArticlepeer-review

72 Scopus citations

Abstract

In this study we examine how the introduction of a reference lottery with nonrandom outcomes alters the way in which choices among pairs of lotteries are made, even if it does not alter the choices. We use different domains (some of the lotteries produce gains, other losses) and different contexts (one member of the pair, the reference lottery, may be either risky or certain). In our experiment, the change from gain to loss domain affects choices: subjects are risk averse in the gain domain, but not in the loss domain. On the contrary, the context effect of the certain lottery does not affect choices. However, the introduction of the certainty reference lottery affects two behavioral variables, response time and brain activation, in a dramatic way. This result suggests that the certainty lottery promotes a different process through which preferences are revealed, even if the differences among lotteries may not be large enough to induce different choices.

Original languageEnglish (US)
Pages (from-to)3536-3541
Number of pages6
JournalProceedings of the National Academy of Sciences of the United States of America
Volume100
Issue number6
DOIs
StatePublished - Mar 18 2003

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