Preference for Different Sequences of Increasing or Decreasing Rewards

Abstract

Preference for different increasing (or decreasing) sequences of rewards has been found to depend both on the magnitude of increase or decrease from step-to-step in the sequence and on the rate of change with which rewards increase or decrease. This experiment examined the effects on preference of different magnitudes and rates of change of reward. Using rewards for actual task performance, four increasing and four decreasing sequences were studied, each consisting of 24 rewards of varying magnitude. Sequences differed according to four possible models of rate change: linear, exponential, logarithmic, and step function. Preferences for given reward sequences obtained prior to extensive task and reward experience (decision utility) were not closely related to preferences after such experience (predicted utility). In the increasing reward sequences, subjects preferred the step sequence (with its single large increase at the end) prior to experience, but after experience they preferred the exponential, linear, and logarithmic sequences which entailed continuous reward-to-reward improvement throughout the sequence. In the decreasing sequences, subjects were less definite in their preferences. Prior to experience they most preferred the logarithmic sequence with its decelerating decline in magnitude of rewards, while after experience they least preferred the step function, with its huge loss at the end of the sequence.