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An overall probability of winning heuristic for complex risky decisions: Choice and eye fixation evidence

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  • Venkatraman, Vinod
  • Payne, John W.
  • Huettel, Scott A.

Abstract

When faced with multi-outcome gambles involving possibilities of both gains and losses, people often use a simple heuristic that maximizes the overall probability of winning (Pwin). Across three different studies, using choice data as well as process data from eye tracking, we demonstrate that the Pwin heuristic is a frequently used strategy for decisions involving complex (multiple outcome) mixed gambles. Crucially, we show systematic contextual and individual differences in the use of Pwin heuristic. We discuss the implication of these findings in the context of the broader debate about single versus multiple strategies in risky choice, and the need to extend the study of risky decision making from simple to more complex gambles.

Suggested Citation

  • Venkatraman, Vinod & Payne, John W. & Huettel, Scott A., 2014. "An overall probability of winning heuristic for complex risky decisions: Choice and eye fixation evidence," Organizational Behavior and Human Decision Processes, Elsevier, vol. 125(2), pages 73-87.
    • Handle: RePEc:eee:jobhdp:v:125:y:2014:i:2:p:73-87
    DOI: 10.1016/j.obhdp.2014.06.003
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    3. Giorgio Coricelli & Enrico Diecidue & Francesco D. Zaffuto, 2018. "Evidence for multiple strategies in choice under risk," Journal of Risk and Uncertainty, Springer, vol. 56(2), pages 193-210, April.
    4. Neszveda, G., 2019. "Essays on behavioral finance," Other publications TiSEM 05059039-5236-42a3-be1b-3, Tilburg University, School of Economics and Management.
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    8. Sangil Lee & Chris M. Glaze & Eric T. Bradlow & Joseph W. Kable, 2020. "Flexible Utility Function Approximation via Cubic Bezier Splines," Psychometrika, Springer;The Psychometric Society, vol. 85(3), pages 716-737, September.
    9. Michal Krol & Magdalena Krol, 2017. "A novel approach to studying strategic decisions with eye-tracking and machine learning," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 12(6), pages 596-609, November.
    10. repec:cup:judgdm:v:12:y:2017:i:6:p:596-609 is not listed on IDEAS
    11. Enrico Diecidue & Moshe Levy & Jeroen Ven, 2015. "No aspiration to win? An experimental test of the aspiration level model," Journal of Risk and Uncertainty, Springer, vol. 51(3), pages 245-266, December.
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    13. Krajbich Ian & Smith Stephanie M., 2015. "Modeling Eye Movements and Response Times in Consumer Choice," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 13(1), pages 55-72, January.
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