Using randomly generated sequences of binary events we asked participants to make predictions about the next event. It turned out that while predicting uncertain events, people do not behave unsystematically. Our research identifies four types of relatively consistent strategies for predicting uncertain binary events: a strategy immune to short-run sequential dependencies consisting of the persistent prediction of long-run majority events, hereafter called the long-run momentum strategy ; a strategy immune to short-run sequential dependencies consisting of the persistent prediction of long-run (...) minority events, called the long-run contrarian strategy ; a strategy sensitive to short-run sequential dependencies consisting of the prediction of short-run majority events, called the short-run momentum strategy ; and a strategy sensitive to short-run sequential dependencies consisting of the prediction of short-run minority events, called the short-run contrarian strategy . When the character of events remains unknown, the most common strategy is the short-run momentum strategy. With the increase of a perceived randomness of the situation, people tend more often to use the short-run contrarian strategy. People differ in their general beliefs about the continuation or reversal of a trend in various natural and social processes. Trend believers, when facing sequences of binary events commonly perceived as random, tend to use momentum strategies, whereas those who believe in the trend's reversal tend to use contrarian strategies. (shrink)

Figner, Mackinlay, Wilkening, and Weber (2009) developed the Columbia Card Task (CCT) to measure risk-taking attitudes. This tool consists of two versions: in the COLD version the decision maker needs to state in advance how many cards (out of 32) they want to turn over (so called static risk taking), in the HOT version they have the possibility of turning over all 32 cards one-by-one until they decide to finish (dynamic risk taking). We argue that the HOT version confounds an (...) individual’s willingness to accept risk with their beliefs in trend continuation vs. trend reversal in a prognostic task. In two experimental studies we show that people believing in trend continuation (momentum subjects) turn over more cards than those believing in trend reversal (contrarians) in the HOT version of the task. However, this is not the case in the COLD version. Thus, we provide evidence that, when considered as a dynamic risk propensity measure, the number of turned over cards in the HOT version of the CCT is a contaminated measure and reflects two phenomena: (1) risk preference and (2) the decision-maker’s belief in trend continuation. We speculate that other dynamic risk taking measures can also be biased by a momentum strategy. (shrink)

Several years ago, Cohen, Dearnaley, and Hansel [1] demonstrated that under the influence of alcohol drivers became more risk prone, although their risk perception remained unchanged. Research shows that ambiguity aversion is to some extent positively correlated with risk aversion, though not very highly [2]. The question addressed by the present research is whether alcohol reduces ambiguity aversion. Our research was conducted in a natural setting (a restaurant bar), where customers with differing levels of alcohol intoxication were offered a choice (...) between a risky and an ambiguous lottery. We found that alcohol reduced ambiguity aversion and that the effect occurred in men but not women. We interpret these findings in terms of the risk-as-value hypothesis, according to which, people in Western culture tend to value risk, and suggest that alcohol consumption triggers adherence to socially and culturally valued patterns of conduct different for men and women. (shrink)

Data from surveys indicate that people, in general, do not trust others. On the other hand, in one-shot trust games, where the player decides whether to send money to an anonymous partner, the actual rate of trust is relatively high. In two experiments, we showed that although reciprocity expectations and profit maximization matter, they are not decisive for trusting behaviour. Crucial factors that motivate behaviour in trust games seem to be altruism and a type of moral obligation related to a (...) social norm encouraging cooperative behaviour. Finally, we were able to divide participants into specific profiles based on amount of money transferred to the partner, altruistic motivation, and belief in partners’ trustworthiness. This shows that the trust game is differently perceived and interpreted by different participants. (shrink)

The strength of emotions in moral judgment and decision-making under risk The focus of this paper is the role of emotions in judgments and choices associated with moral issues. Study 1 shows that depending on the strength of emotions when making a moral decision, people become sensitive to the severity and the probability of harm that their decisions can bring to others. A possible interpretation is that depending on the strength of emotions, people in their moral judgments choose to be (...) either utilitarian or deontologist. In Study 2, following the priority heuristic model, we found that in situations in which the violation of moral norms does not evoke strong negative emotions, people are sensitive to quantitative risk parameters, and the decision-making process requires a relatively longer time. In moral situations in which a violation of the moral norm evokes strong emotions, decision-making is based on arguments other than quantitative risk parameters, and the process takes a shorter time. (shrink)