Self vs. Other in Affective Forecasting: The Role of Psychological Distance and Decision from Experience

Abstract

This work tests self–other differences in the impact bias using the perspectives of psychological distance and decision from description vs. experience. Two studies compared the bias participants made for themselves and for others in a sequential gambling task. The task involved two identical gambles where the first gamble was mandatory and participants made decisions (accept or reject) for the second gamble. Planned decisions were made anticipating a gain or loss in the first gamble, and revised decisions were made following the actual experience of gain or loss. Study 1 compared decisions for self, abstract other, and a close friend. Study 2 replicated the comparison between the self and a close friend and added a measure of empathy. Both studies demonstrated an impact bias indicating that participants tended to overestimate the impact of anticipated outcomes on their tendency towards risk. Specifically, revised decisions indicated risk-aversion shifts after experienced gain and risk-seeking shifts after experienced loss. A reversed pattern emerged for close friends, indicating risky shifts after gain and cautious shifts after loss in Study 1 and for highly empathetic participants in Study 2. Assessing the utility functions that underlie participants’ decisions revealed a qualitative difference. The utility function for the self was consistent with prospect theory (with moderate intensity and diminishing sensitivity), while the utility function for others was more intense with little or no diminishing sensitivity. This research offers new insights regarding the roles of psychological distance and description vs. experience in affective forecasting and impact bias for self vs. other.