Good + Bad = ? Developmental Differences in Balancing Gains and Losses in Value‐Based Decisions From Memory

Quantitative or qualitative development in decision making?

A key question in the developmental sciences is whether developmental differences are quantitative or qualitative. For example, does age increase the speed in processing a task (quantitative differences) or does age affect the way a task is processed (qualitative differences)? Until now, findings in the domain of decision making have been based on the assumption that developmental differences are either quantitative or qualitative. In the current study, we took a different approach in which we tested whether development is best described as being quantitative or qualitative. We administered a judgment version and a choice version of a decision-making task to a developmental sample (n_judgment = 109 and n_choice = 137; M_age = 12.5 years, age range = 9-18). The task, the so-called Gambling Machine Task, required decisions between two options characterized by constant gains and probabilistic losses; these characteristics were known beforehand and thus did not need to be learned from experience. Data were analyzed by comparing the fit of quantitative and qualitative latent variable models, so-called multiple indicator multiple cause (MIMIC) models. Results indicated that individual differences in both judgment and choice tasks were quantitative and pertained to individual differences in "consideration of gains," that is, to what extent decisions were guided by gains. These differences were affected by age in the judgment version, but not in the choice version, of the task. We discuss implications for theories of decision making and discuss potential limitations and extensions. We also argue that the MIMIC approach is useful in other domains, for example, to test quantitative versus qualitative development of categorization, reasoning, math, and memory.

Psychological mechanisms of loss aversion: A drift-diffusion decomposition

Decision makers often reject mixed gambles offering equal probabilities of a larger gain and a smaller loss. This important phenomenon, referred to as loss aversion, is typically explained by prospect theory, which proposes that decision makers give losses higher utility weights than gains. In this paper we consider alternative psychological mechanisms capable of explaining loss aversion, such as a fixed utility bias favoring rejection, as well as a bias favoring rejection prior to gamble valuation. We use a drift diffusion model of decision making to conceptually distinguish, formally define, and empirically measure these mechanisms. In two preregistered experiments, we show that the pre-valuation bias provides a very large contribution to model fits, predicts key response time patterns, reflects prior expectations regarding gamble desirability, and can be manipulated independently of the valuation process. Our results indicate that loss aversion is the result of multiple different psychological mechanisms, and that the pre-valuation bias is a fundamental determinant of this well-known behavioral tendency. These results have important implications for how we model behavior in risky choice tasks, and how we interpret its relationship with various psychological, clinical, and neurobiological variables.