Abstract
Psychological research has firmly established that risk preferences are transient states shaped by past experiences, current knowledge, and feelings as well as the characteristics of the decision environment. We begin this article with a brief review of evidence supporting this conception as well as different psychological theories explaining how preferences are constructed. Next, we introduce the distributed perspective on human cognition and show how it may offer a promising framework for unifying seemingly incompatible accounts. We conclude by suggesting new directions for better capturing the essence of preference construction in laboratory research.
Highlights
On the Psychology of Human Preferences and Risky Choices Psychologists have long assumed that core cognitive processes such as memory, perception, and attention are inherently constructive – they are the product of the content of thoughts and the situation within which people are embedded when they think (Bartlett, 1932; Neisser, 1967)
The work of Tversky and Kahneman’s (1981) on choice framing illustrated how the superficial framing of the description of options can cause a reversal in risk preferences – from risk-seeking preferences in a choice between options framed with losses to risk-averse preferences when the same choice is framed with gains
The ecological approach (e.g., Brighton and Todd, 2009) proposes that the mind is endowed with an “adaptive toolbox” containing purpose-built simple decision heuristics that exploit the structure of the information in the immediate environment
Summary
On the Psychology of Human Preferences and Risky Choices Psychologists have long assumed that core cognitive processes such as memory, perception, and attention are inherently constructive – they are the product of the content of thoughts and the situation within which people are embedded when they think (Bartlett, 1932; Neisser, 1967). Some conceive preference construction as resulting from the impact of the environment on individuals’ strategy choice or representations.
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