Strategic interaction among stakeholders on low-carbon buildings: A tripartite evolutionary game based on prospect theory

Low-carbon buildings (LCBs) are still in the early stages of development in China. The promotion and implementation of associated policies are not yet fully matured. Meanwhile, their status as public goods exacerbates the uncertainty and complexity regarding anticipated gains and potential losses. Few studies have explored the impact of perception parameters on the decision-making processes of LCBs' stakeholders. Thus, combined with prospect theory, this paper establishes a tripartite game model composed of governments, developers, and consumers to explore their interactions and influences in different stages. Real-life scenarios are further utilized to validate the effectiveness of the model in predicting the behaviors under respective preferences. The results show that the increase in subsidy and penalty intensity instead diminishes the enthusiasm for LCBs. More specifically, the existing subsidy policies offer limited incentives to consumers. With the addition of the perception parameter, there exist differences in the sensitivity of consumers and developers towards risk levels and potential losses. The findings also highlight the importance of consumers in the LCBs market. Future policies should encourage developers and consumers to jointly promote the LCBs implementation.

Steady-state analysis of social responsibility strategy of coal power enterprises from the perspective of game theory

Under the dual-carbon background, coal power enterprises are required to actively fulfill their social responsibility in order to achieve energy saving and emission reduction as soon as possible. Considering the uncertainty of the external environment and the potential conflict of interest of the key stakeholders in the fulfillment of corporate social responsibility, coal power enterprises are not always positive in fulfilling their social responsibility. This paper combines prospect theory and mental account theory with evolutionary game to construct an evolutionary game model involving coal power enterprises, government regulators and the public to study the social responsibility behavior of coal power enterprises. The results of the study show that: (1) The social responsibility behavior of coal power enterprises under the dual-carbon background is a typical cost-driven behavior, and coal power enterprises are more sensitive to costs compared to benefits. (2) The formulation of regulatory policies by government regulators largely depends on the decision inertia of coal power enterprises, and the formulation of regulatory policies by government regulators will also affect the decision inertia of coal power enterprises. (3) The public's strategic choices do not entirely depend on the strategic choices of coal and power enterprises and government regulators, and are more closely related to the setting of the reference point. (4) In addition to the realistic factors, the subjective factors of decision makers are also important factors affecting the fulfillment of social responsibility of coal and power enterprises. Based on the results of the study, this paper proposes countermeasures to enhance the internal driving force of coal power enterprises to fulfill their social responsibility behaviors from the aspects of establishing a communication mechanism, improving the reward and punishment system, and strengthening risk management.

Simulation analysis of the three-party evolutionary game of green building market players under carbon trading policy

Previous studies mainly focus on the game analysis of green building development under carbon tax policy, while carbon trading, as one of the important means to promote low-carbon development, is rarely mentioned in promoting the development of the green building market. Based on this, to study the impact of carbon trading policy on the development of the green building market, this study combines prospect theory for carbon trading to build a three-way evolutionary game model of developer-government-consumer. It studies the influencing causes of green building market development under the carbon trading mechanism from the whole perspective. The study shows the existence of a carbon trading policy helps the development of the green building market. In the presence of a carbon trading market, the government's punishment, subsidies, and the setting of carbon prices influence the development of the green building market. In addition, the percentage of carbon emissions bought, the potential benefits, and the selling price also affect the chance of consumers buying green buildings to a greater or lesser extent. This study introduces prospect theory into the developer-government-consumer three-way evolutionary game model, which enriches the research perspective of each subject's behavior in the green building market. It provides theoretical support for developers, governments, and consumers to collaborate to promote the coordination and development of the green building market. It has policy implications for promoting the green and high-quality development of the construction industry.

Land suitability analysis of urban agriculture for different investment scenarios: Evidence from fuzhou of China

Urban agriculture provides a new strategic idea for solving the problem of urban food demand. The main objective of this study is to develop a spatial model for land suitability evaluation of urban agricultural development under different investment demands (urban agriculture 1.0 and 2.0), based on prospect theory and using GIS and TOPSIS analysis techniques. As a whole, we have developed a land suitability evaluation system for urban agricultural development under different investment needs (urban agriculture 1.0 and 2.0). We constructed a land suitability evaluation system for urban agriculture including ecological environment, social demand and investment cost. The results of the land suitability analysis for urban agriculture 1.0 show that the most suitable area is located in Changle. Compared with urban agriculture 1.0, the most suitable area for urban agriculture 2.0 is in Gulou. It is worth noting that Cangshan ranks second in both scenarios and can be used as a potential solution to balance the ecological environment, social demand and investment cost. Determining appropriate land suitability priorities for urban agriculture will facilitate future agricultural investment management and land use planning.

Loss aversion in the control of attention

Loss aversion is a psychological bias where an increase in loss is perceived as being larger than an equivalent increase in gain. In the present study, two experiments were conducted to explore whether attentional control reflects loss aversion. Participants performed a visual search task. On each trial, a red target and a green target were presented simultaneously, and participants were free to search for either one. Participants always gained points when they searched for a gain color target (e.g., red). However, they gained or lost points when they searched for a gain-loss color target (e.g., green). In Experiment 1, the expected values of the gain color and the gain-loss color were equal. Therefore, for maximizing the reward, participants did not need to preferably search for a particular color. However, results showed that participants searched for the gain color target more than the gain-loss color target, suggesting stronger attentional control for the gain color than the gain-loss color. In Experiment 2, even though the expected value of the gain-loss color was greater than that of the gain color, attention was allocated to the gain color more than to the gain-loss color. The results imply that attentional control can operate in accordance with the loss aversion principle when the boundary conditions for loss aversion in a repeated binary decision-making task were met.

Promoting COVID-19 booster vaccines in Macao: A psychological reactance perspective

RATIONALE

The booster vaccine plays a key role in ending COVID-19 crisis. However, promoting COVID-19 booster vaccination often interferes with individuals' freedom of choice and leads to psychological reactance.

OBJECTIVE

To promote the public's intention to receive COVID-19 booster dose, this study aimed to investigate the effectiveness of different message designs from psychological reactance theory's perspective.

METHOD

A 2 × 2 × 2 factorial experiment was conducted in Macao in January 2022 (N = 469). Partial least squares structural equation modeling and a complementary three-way ANOVA were performed to examine the effects of message frame (gain frame vs. loss frame), freedom restoration postscripts (present vs. absent), and other-referencing cues (present vs. absent) on reducing psychological reactance.

RESULTS

The present study has successfully broadened the scope of the psychological reactance theory by examining its applicability to the context of COVID-19 booster vaccination promotion. Our findings indicate that the gain-framed promotion messages tend to be the most effective in reducing perceived reactance. However, freedom restoration postscripts, other-referencing cues, and mixed message design were found to be ineffective in alleviating reactance. Besides, the insignificance of direct effect from message frame to intention suggests that the message design itself cannot influence people's vaccination intentions; rather, it must rely on reducing perceived threat, reactance, and further improving vaccination intentions.

CONCLUSIONS

Our study offered valuable insights from psychological reactance perspective, identifying message features that can be effective in health promotions. Furthermore, message design specifically aimed at reducing the threat to freedom may yield unexpected persuasive effects, an aspect currently overlooked in health promotion strategies.

Safety state evaluation method of the highway tunnel structure

This study proposes an evaluation method for the structural safety of expressway tunnels utilizing possibility and prospect theories to address the influence of multiple indicators on the structural safety of expressway tunnels and the imprecision of human-bounded rationality in assessing results. It constructs the probability distribution of safety level by determining the safety level of the highway tunnel structure. The reference distribution function of each monitoring index is then derived using the expected value of experts. Based on the possibility theory, the possibility distribution of the monitoring results of indicators is obtained, and the mapping relationship between the monitoring indicators and the possibility distribution function of safety status grade is developed. Finally, the prospect theory evaluates the highway tunnel structure's safety status. This method is applied to assess the structural safety of a highway tunnel, which verifies its effectiveness and practicability, and provides a new method for evaluating the structural safety of a highway tunnel.

Financial recommendations on Reddit, stock returns and cumulative prospect theory

This study investigates stock recommendations from the three largest finance subreddits on Reddit: wallstreetbets, investing and stocks. A simple strategy that buys recommended stocks weighted by the number of posts per day yields a portfolio with higher average returns at the expense of higher risks than the market for all holding periods, i.e., unfavorable Sharpe ratios. Furthermore, the strategy leads to positive (insignificant) short-term and negative (significant) long-term alphas when considering common risk factors. This is consistent with the idea of "meme stocks", meaning that the recommended stocks are artificially inflated in the short term when they are recommended, and that the posts contain no information about long-term success. However, it is likely that Reddit users, especially on the subreddit wallstreetbets, have preferences for bets which are not captured by the mean-variance framework. Therefore, we draw on cumulative prospect theory (CPT). We find that the CPT-valuations of the Reddit portfolio exceed those of the market, which may explain the persistent attractiveness for investors to follow social media stock recommendations despite the unfavorable risk-return ratio.

Multi-user multi-objective computation offloading for medical image diagnosis

Computation offloading has effectively solved the problem of terminal devices computing resources limitation in hospitals by shifting the medical image diagnosis task to the edge servers for execution. Appropriate offloading strategies for diagnostic tasks are essential. However, the risk awareness of each user and the multiple expenses associated with processing tasks have been ignored in prior works. In this article, a multi-user multi-objective computation offloading for medical image diagnosis is proposed. First, the prospect theoretic utility function of each user is designed considering the delay, energy consumption, payment, and risk awareness. Second, the computation offloading problem including the above factors is defined as a distributed optimization problem, which with the goal of maximizing the utility of each user. The distributed optimization problem is then transformed into a non-cooperative game among the users. The exact potential game proves that the non-cooperative game has Nash equilibrium points. A low-complexity computation offloading algorithm based on best response dynamics finally is proposed. Detailed numerical experiments demonstrate the impact of different parameters and convergence in the algorithm on the utility function. The result shows that, compare with four benchmarks and four heuristic algorithms, the proposed algorithm in this article ensures a faster convergence speed and achieves only a 1.14% decrease in the utility value as the number of users increases.

Assessment of airline industry using a new double-frontier cross-efficiency method based on prospect theory

Cross-efficiency method (CEM) is a well-known technique based on data envelopment analysis that provides policymakers with a powerful tool to measure the efficiency of decision-making units. However, there are two main gaps in the traditional CEM. First, it neglects the subjective preferences of decision-makers (DMs), and therefore, cannot reflect the importance of self-evaluation compared to peer-evaluations. Second, it ignores the importance of anti-efficient frontier in the overall evaluation. The present study aims to incorporate the prospect theory into the double-frontier CEM to deal with these drawbacks while considering the preferences of DMs towards gains and losses. To address these drawbacks, this paper utilizes an aggregation method based on the prospect theory and consensus degree (APC) to reflect the subjective preferences of DMs. The second issue is also addressed by incorporating APC into the optimistic and pessimistic CEMs. Finally, the double-frontier CEM aggregated using APC (DAPC) is obtained by aggregating two viewpoints. As a real case study, DAPC is applied to evaluate the performance of 17 Iranian airlines based on three inputs and four outputs. The findings demonstrate that both viewpoints are influenced by DMs' preferences. The ranking results achieved for more than half of the airlines based on the two viewpoints are significantly different. The findings confirm that DAPC deals with these differences and leads to more comprehensive ranking results by considering both subjective viewpoints simultaneously. The results also show that to what extent DAPC efficiency for each airline is influenced by each viewpoint. In this regard, the efficiency of IRA is most influenced by the optimistic point of view (80.92%), and on the other hand, the efficiency of IRZ is most influenced by the pessimistic viewpoint (73.45%). KIS is the most efficient airline, followed by PYA. On the other hand, IRA is the least efficient airline, followed by IRC.

Causal intuition in the indefinite world: Meta-analysis and simulations

Modeling our causal intuition can contribute to understanding our behavior. In this paper, we introduce a causal induction model called proportion of assumed-to-be rare instances (pARIs) and examine its adaptive properties. We employ the two-stage theory of causal induction proposed by Hattori and Oaksford in 2007, which divides causal induction into two stages: first, observed events are sifted and likely candidates are extracted; second, each of them is verified through intervention. Here, we focus on the first stage. We conducted a meta-analysis and computer simulations in a similar way to Hattori and Oaksford (2007) but with some corrections and improvements. We added two experiments and excluded one in our reconstructed meta-analysis and augmented the simulations by correcting two problems. Our meta-analysis results show that pARIs outperforms more than 40 existing models in terms of data fit from human causal induction experiments while being simpler. Additionally, our simulation results show that pARIs outperforms DFH in terms of population covariation detection, especially under small sample sizes and rarity of events. Overall, pARIs qualifies as one of the best models for the first stage of causal induction. These findings may enable a deeper understanding of our cognitive biases. The first stage can now be considered a causal discovery stage where the topology of causal models is to be hypothesized.

Reshapping agriculture technology adoption thinking: Malthus, Borlaug and Ghana's fail green revolution

Previous research on green revolution established the effect of farmers' socio-economics characteristics on technology adoption; however, the impact of culture and religion is unclear. This research collected data through a survey from January to April 2019. Participants were rice farmers from three ethnic groups (Mole-Dagbani, Gurma and Guan) and three religious' denominations (Christianity, Islam and Christianity). After analysing the data to identify critical societal values affecting the adoption of improved rice varieties, we realised that our results appropriately explained Prospect theory. We find that cultural and religious values significantly influence rice farmers' adoption decisions. Christian faith has a positive relationship with the adoption of improved rice seeds, while the Islamic religion has a negative connection. The fact that culture and religion affect adoption suggest agriculture technology societal standard integration. Based on the findings, we recommend the all-inclusive approach in the diffusion of agricultural technology.

Effect of exogenous testosterone in the context of energy deficit on risky choice: Behavioural and neural evidence from males

Previous research has shown greater risk aversion when people make choices about lives than cash. We tested the hypothesis that compared to placebo, exogenous testosterone administration would lead to riskier choices about cash than lives, given testosterone's association with financial risk-taking and reward sensitivity. A double-blind, placebo-controlled, randomized trial was conducted to test this hypothesis (Clinical Trials Registry: NCT02734238, www.clinicaltrials.gov). We collected functional magnetic resonance imaging (fMRI) data from 50 non-obese males before and shortly after 28 days of severe exercise-and-diet-induced energy deficit, during which testosterone (200 mg testosterone enanthate per week in sesame oil) or placebo (sesame seed oil only) was administered. Because we expected circulating testosterone levels to be reduced due to severe energy deficit, testosterone administration served a restorative function to mitigate the impact of energy deficit on testosterone levels. The fMRI task involved making choices under uncertainty for lives and cash. We also manipulated whether the outcomes were presented as gains or losses. Consistent with prospect theory, we observed the reflection effect such that participants were more risk averse when outcomes were presented as gains than losses. Brain activation in the thalamus covaried with individual differences in exhibiting the reflection effect. Testosterone did not impact choice, but it increased sensitivity to negative feedback following risky choices. These results suggest that exogenous testosterone administration in the context of energy deficit can impact some aspects of risky choice, and that individual differences in the reflection effect engage a brain structure involved in processing emotion, reward and risk.

Factors affecting firms' green technology innovation: an evolutionary game based on prospect theory

In the context of green development and the construction of ecological civilization, a key issue for governments is how to promote firms' green technology innovation. Assuming the bounded rationality of decision-makers, this paper constructs a game model of green technology innovation between firms and the government based on prospect theory. It dynamically analyzes the decision process and optimal strategy under different scenarios and uses numerical simulation to identify the influencing factors. There are three main findings. (1) Firms' green technology innovation decisions depend on the net income difference between strategies. Environmental regulation encourages firms to carry out green technology innovation by increasing the environmental costs to non-green technology innovation firms and increasing the income of green technology innovation firms. (2) Uncertainty and the behavioral characteristics of managers significantly affect green technology innovation. Firms' green technology innovation is positively correlated with the success rate of green technology innovation, whereas is negatively correlated with perceived value sensitivity and loss aversion. (3) There is instrumental heterogeneity in the incentive effect of environmental regulation on firms' green technology innovation. The most effective tool is comprehensive environmental regulation, followed by punishment and then subsidy. The research provides a reference for governments to formulate environmental regulations and firms to manage innovation.

Modeling nonlinear in Bowman's paradox: the case of Pakistan

Prospect theory frequently explains the empirical results of Bowman's paradox (negative relationship between risk and return). However, the empirical econometric model of these researches is misspecified. This study used a data-driven approach to improve the econometric model. Empirical results based on the improved econometric model are also reinforced by data visualization to be illustrated in depth. For this purpose, we used the data of 622 listed firms on the Pakistan Stock Exchange from 2000 to 2019. Our results contradict the literature on prospect theory based on the improved econometric model.

Awareness, Understanding and HIV Stigma in Response to Undetectable = Untransmittable Messages: Findings from a Nationally Representative Sample in the United Kingdom

'Undetectable = Untransmittable', or 'U = U', is a message which communicates the scientific consensus that people living with HIV who maintain an undetectable viral load cannot sexually transmit HIV to others. This research aimed to empirically test whether a protection-framed U = U message is more effective at decreasing HIV stigma and increasing perceived accuracy of U = U than a risk-framed message. A nationally representative UK sample (N = 707) completed an online experiment. Participants viewed one of two U = U messages (protection-framed or risk-framed) and completed an online questionnaire. No evidence of a difference in HIV stigma at post-test or in perceived accuracy of U = U was found between the two message frame conditions. A minority of participants were aware of U = U prior to participation. Post-intervention, the majority of participants rated U = U as at least somewhat accurate. Higher understanding of U = U was associated with lower post-test stigma following a protection-framed message. Following a brief intervention, among a sample predominantly unaware of U = U previously, there was an overall favourable rating of U = U. No evidence was found for an effect of message framing on HIV stigma or perceived accuracy of U = U, but participants who completed a pre-test measure of stigma rated U = U as less accurate.

Comparing utility functions between risky and riskless choice in rhesus monkeys

Decisions can be risky or riskless, depending on the outcomes of the choice. Expected utility theory describes risky choices as a utility maximization process: we choose the option with the highest subjective value (utility), which we compute considering both the option's value and its associated risk. According to the random utility maximization framework, riskless choices could also be based on a utility measure. Neuronal mechanisms of utility-based choice may thus be common to both risky and riskless choices. This assumption would require the existence of a utility function that accounts for both risky and riskless decisions. Here, we investigated whether the choice behavior of two macaque monkeys in risky and riskless decisions could be described by a common underlying utility function. We found that the utility functions elicited in the two choice scenarios were different from each other, even after taking into account the contribution of subjective probability weighting. Our results suggest that distinct utility representations exist for risky and riskless choices, which could reflect distinct neuronal representations of the utility quantities, or distinct brain mechanisms for risky and riskless choices. The different utility functions should be taken into account in neuronal investigations of utility-based choice.

An extended MABAC method based on prospect theory with unknown weight information under Fermatean fuzzy environment for risk investment assessment in B&R

The assessment of investment risk for the countries along the route in Belt and Road (B&R) can be deemed as a multiple criteria group decision making (MCGDM) issue since multiple investment options based on diverse criterions are assessment by experts. Pondering that the complexity and uncertainty of the assessment setting and the cognition fuzziness and psychological behavior of experts bring challenges to risk assessment, this paper designed an integrated MCGDM risk investment evaluation framework by synthesizing MABAC method and prospect theory under Fermatean fuzzy setting. Firstly, a Fermatean fuzzy interactive distance measure is presented to ascertain the weight of evaluation experts and criterions. Next, some Fermatean fuzzy Frank aggregation operators based upon the proposed Frank operations are developed to fuse Fermatean fuzzy information efficiently. In addition, an innovative evaluation framework for risk investment is designed based on improved prospect theory MABAC and CRITIC approaches. Conclusively, an empirical concerning risk investment issues in B&R is employed to confirm the applicability and feasibility of the constructed evaluation framework, involving the simulation experiments on sensitivity analysis and contrast studies. The assessment information provided by investors using the linguistic assessment terms based upon their cognition ability of them. These outcomes obtained by the propounded method and comparison analysis further emphasize the validity and salient merits of the propounded framework and provide several auxiliary suggestions for investors.

Elucidating competing strategic behaviors using prospect theory, system dynamics, and evolutionary game: a case of transjurisdictional water pollution problem in China

Water is a critical natural resource for socio-economic and environmental systems. In transjurisdictional river basins, when basin-wide water pollution management scheme is absent, stakeholders tend to adopt utility-maximizing behavior based on incomplete information. Such a scenario could lead to a free-riding problem. This paper attempts to elucidate the strategic behavior of riparian regions using prospect theory, evolutionary game, and system dynamics. The evolution of riparian regions' strategic behaviors is explained, and the impacts of different factors on their strategic selections are simulated. The results showed that the prospective value of factors and stakeholders' attitude to risk are a key for resolving transjurisdictional river water pollution problems. Improving the subjective judgment of the probability of water pollution, raising awareness, strengthening the penalties in "polluter pays" schemes, abandoning segmented river basin management, and building a basin-wide water management system are vital for maintaining the ecological integrity of any transjurisdictional river basin and accelerate the sustainable development of its riparian regions.

Dynamic Reference Point-Oriented Consensus Mechanism in Linguistic Distribution Group Decision Making Restricted by Quantum Integration of Information

We present a consensus improvement mechanism based on prospect theory and quantum probability theory (QPT) that enables the manifestation of irrational and uncertain behaviors of decision makers (DMs) in linguistic distribution group decision making. In this framework, the DMs pursue the possibility of working with different partial agreements on prospect values. Considering that the reference information should be comprehensive and accurate as it guides information modification and affects consensus efficiency, objective and subjective information is integrated to obtain the information. Several studies have verified that the interference effect will occur when the brain beliefs flow towards the different decision classification paths. To address this problem, QPT is introduced into the information integration and the optimized value of the interference term can be acquired by the designed multi-objective programming model based on the maximum individual utility. Finally, as the reference point changes during the preference adjustment process, a dynamic reference point-oriented consensus model is constructed to obtain the optimized modification. A case study is performed on the emergency plan for the selection of designated hospitals, and comparative analyses are performed to demonstrate the feasibility and advantages of the proposed model. Several important insights are offered to simulate the most likely possibility of consciousness flowing into different decision classifications for DMs and moderators.

Evolutionary game of inland shipping pollution control under government co-supervision

In the context of the environmental improvement of inland shipping, this paper studies the interaction mechanism of tripartite behavioral strategy selection among the upstream and downstream governments and shipping companies in neighboring provinces. This paper constructs a tripartite evolutionary game model that introduces the prospect theory, and verifies numerical examples in combination with system dynamics simulation methods. Therefore, this study discusses the influence of evolutionary stability strategies on the development of electric ship industry. The results show that in order to realize effective governance of inland shipping pollution, the optimal evolutionary stability strategies of the three stakeholders should be as follows: active supervision in both upstream and downstream governments, and using clean energy in shipping companies. The improvement of the initial probability and risk preference of the three parties is conducive to promoting the faster and more stable industrial development, while reasonable profit distribution coefficient and compensation cost can promote the benign development of the inland river environmental governance system. In addition, the probability of upstream and downstream governments and shipping companies choosing the optimal strategies is positively related to the government fines, and negatively related to the regulatory costs. In particular, the application of prospect theory makes the result of evolutionary equilibrium more obvious.

Adaptation of utility functions to reward distribution in rhesus monkeys

This study investigated how the experience of different reward distributions would shape the utility functions that can be inferred from economic choice. Despite the generally accepted notion that utility functions are not insensitive to external references, the exact way in which such changes take place remains largely unknown. Here we benefitted from the capacity to engage in thorough and prolonged empirical tests of economic choice by one of our evolutionary cousins, the rhesus macaque. We analyzed data from thousands of binary choices and found that the animals' preferences changed depending on the statistics of rewards experienced in the past (up to weeks) and that these changes could reflect monkeys' adapting their expectations of reward. The utility functions we elicited from their choices stretched and shifted over several months of sequential changes in the mean and range of rewards that the macaques experienced. However, this adaptation was usually incomplete, suggesting that - even after months - past experiences held weight when monkeys' assigned value to future rewards. Rather than having stable and fixed preferences assumed by normative economic models, our results demonstrate that rhesus macaques flexibly shape their preferences around the past and present statistics of their environment. That is, rather than relying on a singular reference-point, reference-dependent preferences are likely to capture a monkey's range of expectations.

Dynamic reward and penalty strategies of green building construction incentive: an evolutionary game theory-based analysis

Green building incentives are widely adopted in the world to promote green building construction. However, the incentives from the government are usually predetermined, which cannot obtain a stable effect in green construction practice. To better promote green building construction, this paper studies dynamic government's reward and penalty evolution during the construction process. Based on the prospect theory, the decision of government reward and penalty is formulated as evolutionary game model under four different scenarios: static reward and static penalty, dynamic reward and static penalty, static reward and dynamic penalty, and dynamic reward and dynamic penalty. Through theoretical analysis, our results revealed that the dynamic reward and static penalty is the best strategy to promote green building construction. More specifically, if the intensity of subsidy and penalty increases, contractors tend to green construction; while the probability of active supervision by government is inversely proportional to subsidy and positively proportional to penalty. This study can provide a useful insight for the policy makers to formulate effective reward and penalty policy, thereby standardizing the behavior of contractors, and reducing the negative impact of the construction industry on the environment.

Perceptions of cruise travel during the COVID-19 pandemic: Market recovery strategies for cruise businesses in North America

The study aims to identify consumer perceptions of the cruise industry amid the COVID-19 pandemic and seeks to provide market recovery strategies for cruise businesses. The relationship between perceptions among cruise experience and COVID-19 financial status groups were explored. The results of analyses of data from 759 respondents indicated that travel constraints negatively influence behavioral intention through negativity bias. Further, perceived crisis management positively affects behavioral intention through attitude-trust. New consumers' behavioral intention is significantly affected by the negativity bias, and the perceived crisis management manipulates the trust of financial-affected consumers.

When a gain becomes a loss: The effect of wealth predictions on financial decisions

When people make financial decisions, they need not only think about their current financial situation, but also about changes in future wealth. This work investigates people's beliefs about their future wealth and how these beliefs impact financial decisions. Using a joint experimental and computational cognitive modeling approach, we show that people's future beliefs serve as reference points when making investment decisions. These results are further supported by data from a large-scale cross-sectional survey (n = 4606) showing that people's beliefs about the future value of their assets are related to investment decisions between risky (i.e., stock market index) and safe (i.e., bond earning a fixed amount per year) options. In both the experiments and survey, we hypothesize that outcomes that are nominally stated as sure gains can become coded as losses due to belief-based reference points. This pattern leads to an increase in riskier choices across positive outcomes for individuals with optimistic beliefs about their future wealth.

How Much Are Borrowers Willing to Pay to Remove Uncertainty Surrounding Mortgage Defaults?

Using a large, non-student sample, we assess and differentiate between borrowers' Risk Aversion and Ambiguity Aversion levels and their willingness to pay to resolve a mortgage default settlement negotiation. Ambiguity Aversion is found to be negatively associated with willingness to pay for borrowers with high financial literacy in both the gain and loss domains, whereas personality traits matter more for borrowers with low financial literacy. This finding is important to policymakers in that they should adopt differential resolution strategies for defaulting borrowers based on these intervening variables.

Loss aversion fails to replicate in the coronavirus pandemic: Evidence from an online experiment

Loss aversion is a foundational bias and is a natural choice for interventions encouraging compliance during COVID-19. We compare the effectiveness of loss and gain messages and find no difference in the intention to comply with guidance or lockdown beliefs.

Going, going, gone: competitive decision-making in Dutch auctions

In a Dutch auction, an item is offered for sale at a set maximum price. The price is then gradually lowered over a fixed interval of time until a bid is made, securing the item for the bidder at the current price. Bidders must trade-off between certainty and price: bid early to secure the item and you pay a premium; bid later at a lower price but risk losing to another bidder. These properties of Dutch auctions provide new opportunities to study competitive decision-making in a group setting. We developed a novel computerised Dutch auction platform and conducted a set of experiments manipulating volatility (fixed vs varied number of items for sale) and price reduction interval rate (step-rate). Triplets of participants (\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$N=66$$\end{document}N=66) competed with hypothetical funds against each other. We report null effects of step-rate and volatility on bidding behaviour. We developed a novel adaptation of prospect theory to account for group bidding behaviour by balancing certainty and subjective expected utility. We show the model is sensitive to variation in auction starting price and can predict the associated changes in group bid prices that were observed in our data.

Evidence combination based on prospect theory for multi-sensor data fusion

Multi-sensor data fusion (MSDF) is an efficient technology to enhance the performance of the system with the involvement of different kinds of sensors, which are broadly utilized in many fields at present. However, the data obtained from multi-sensors may have different degrees of uncertainty in the practical applications. Evidence theory is very useful to convey and manage uncertainty without a priori probability, so that it has been proverbially adopted in the information fusion fields. However, in the face of conflicting evidences, it has the possibility of producing counterintuitive results via conducting the Dempster's combination rule (DCR). To solve the above-mentioned issue, a hybrid MSDF method is exploited through integrating a newly defined evidential credibility measure of evidences based on prospect theory and the evidence theory. More specifically, a series of concepts for the evidential credibility measure are first presented, including the local credibility degree, global credibility degree, evidential credibility estimation and credibility prospect value function to comprehensively describe the award and punish grades in terms of credible evidence and incredible evidence, respectively. Based on the above researches, an appropriate weight for each evidence can be obtained. Ultimately, the weight of each evidence is leveraged to amend the primitive evidences before conducting DCR. The results attained in the experiments demonstrate that the hybrid MSDF approach is efficient and superior to handle conflict evidences as well as the application in data fusion problems.

The effect of expected financial performance on corporate environmental responsibility disclosure: evidence from China

Nowadays, firms spend a great deal of effort on Corporate Environmental Responsibility (CER) disclosure. From prospect theory, firms might disclose more CER information when they fail to achieve expected financial performance of the organization. We have constructed a CER disclosure index based on the "Guidelines for Environmental Information Disclosure of Listed Companies" issued by the Ministry of Environmental Protection of China in 2010. Using content analysis, we analyze 397 Chinese manufacturing Shanghai A-share listed firms from 2011 to 2017 (2090 firm-year observations) to investigate the relationship between corporate expected financial performance and CER disclosure. Our results show that, firstly, when the firm does not achieve the expected performance that is when the actual expectation is lower than the expected performance of the organization, the disclosure of corporate environmental responsibility increases; secondly, we have explored the moderating effect of industry categories; we have found that when firms fail to achieve the expected performance of the organization, light polluting firms are more inclined towards disclosing the environmental responsibility information than heavy polluting firms. Additionally, we have also studied the behavior of corporate environmental responsibility disclosure in the case of analysts expecting performance as a point of reference and got the same results.

Gain-loss framing and patients' decisions: a linguistic examination of information framing in physician-patient conversations

When discussing risks and benefits with cancer patients, physicians could focus on losses such as mortality rates and cancer recurrence or, alternatively, gains such as survival rates and curing cancer. Previous research has shown that the way health information is framed influences individuals' preferences and choices. We operationalized gain-loss framing as physicians' choice of words related to gains (cancer survival), or losses (cancer mortality). In an exploratory analysis, we investigated (a) whether physicians used gain or loss words as a function of their recommendation, (b) whether physicians' choice of words was associated with patients' treatment choices. We analyzed transcribed consultations with male patients who had intermediate-risk prostate cancer. Using an iterative process of gathering and evaluating words, we created gain- and loss-dictionaries. The loss-dictionary included words related to cancer death and cancer progression. The gain-dictionary included words related to survival and cure. Using Linguistic Inquiry and Word Count software, we calculated the number of words related to gains and losses in each transcript. We found that physicians who recommended immediate cancer treatment for prostate cancer (vs. active surveillance) used slightly fewer words related to losses and significantly fewer words related specifically to death from cancer. Further analysis showed that loss words were associated with the patient's choice of immediate cancer treatment. A novel method of automated text analysis showed that physicians' use of loss words was correlated with physicians' recommendations for cancer treatment versus active surveillance. Additionally, loss words in consultations were associated with patients' choice of cancer treatment.

Living up to expectations: Experimental tests of subjective life expectancy as reference point in time trade-off and standard gamble

Earlier work suggested that subjective life expectancy (SLE) functions as reference point in time trade-off (TTO), but has not tested or modelled this explicitly. In this paper we construct a model based on prospect theory to investigate these predictions more thoroughly. We report the first experimental test of reference-dependence with respect to SLE for TTO and extend this approach to standard gamble (SG). In two experiments, subjects' SLEs were used to construct different versions of 10-year TTO and SG tasks, with the gauge duration either described as occurring above or below life expectation. Our analyses suggest that both TTO and SG weights were affected by SLE as predicted by prospect theory with SLE as reference point. Subjects gave up fewer years in TTO and were less risk-tolerant in SG below SLE, implying that weights derived from these health state valuation methods for durations below SLE will be biased upwards.

Impact of relative and absolute values on selective attention

Valuable stimuli receive attentional priority. However, it is unknown whether the mechanism of the attentional priority is based on relative (e.g., higher) or absolute (e.g., 45 points) values. Therefore, we manipulated the relative and absolute values independently in a modified value-driven attentional capture paradigm. In the training phase, where associative learning occurs between color and reward value, two test target colors were each presented with another different target color (reference target colors) in separate context blocks. Therefore, each test target color had different reference points. In the test phase, the two test target colors were used as singleton distractor colors. In the training phase of Experiment 1, the absolute reward value of the test target colors was the same, but one had a higher value than its reference target color and the other had a lower value. In the test phase, the high relative value color distractor captured attention more, suggesting that the relative value of stimuli influenced selective attention. In Experiment 2 the relative value of the test target colors was the same, but the absolute value was higher for one. The high and low absolute value color distractors captured attention equally in the test phase, indicating little impact of the absolute value on selective attention. These findings suggest that the relative value, rather than absolute value, plays a critical role in the allocation of attention. Accordingly, the present study suggests that prospect theory (Kahneman & Tversky, Econometrica, 47 (2), 363-391, 1979) can be extended to earlier cognitive stages such as selective attention.

Modeling choice paradoxes under risk: From prospect theories to sampling-based accounts

Important developments in the study of decision making have been based on the establishment and testing of choice paradoxes (e.g., Allais') that reject different theories (e.g., Expected Utility Theory). One of the most popular and celebrated models in the literature, Cumulative Prospect Theory (CPT), has managed to retain its status despite a growing body of empirical evidence stemming from a collection of choice paradoxes that reject it. Two alternative models, Transfer of Attention Exchange (TAX) and an extension of Decision Field Theory (DFT_e), have been proposed as possible alternatives to CPT. To date, no study has directly compared these three models within the context of a large set of lottery problems that tests different choice paradoxes. The present study accomplishes this by using a large and diverse set of lottery problems, involving both potential gains and losses. Our results support the presence and robustness of a set of 'strong' choice paradoxes that reject CPT irrespective of its parametric form. Model comparison results show that DFT_e provides the best account for the present set of lottery problems, as it is able to accommodate the choice data at large in a parsimonious fashion. The success of DFT_e shows that many behavioral phenomena, including paradoxes that CPT cannot account for, can be successfully captured by a simple noisy-sampling process. Overall, our results suggest that researchers should move away from CPT, and focus their efforts on alternative models such as DFT_e.

Can positive income anticipations reverse the mental health impacts of negative income anxieties?

Prospect theory suggests losses are more influential than equivalent sized gains in individual level decision-making. Extending this literature, we use longitudinal National Population Health Survey data (2000-01 to 2010-11) to investigate whether experienced psychological distress impacts of greater economic insecurity for working age Canadians can be fully reversed by equal sized increases in security. Economic insecurity (security) is defined as the probability of an annual income decrease (increase) of 25 percent or more. Our identification strategy employs fixed effects estimation and a set of instruments to control for unobserved heterogeneity and reverse causality. Results suggest that an initial one standard deviation increase in economic insecurity predicts a rise in psychological distress of about 0.57 standard deviations for males and 0.54 standard deviations for females. Good economic news of a similar magnitude has considerably less impact, reducing psychological distress by 0.16 and 0.35 standard deviations for males and females respectively.

Linking risk attitudes, time preferences, and body mass index in Catalonia

Obesity is projected to increase in the coming years, despite the various socioeconomic policies implemented by governments and policy makers. As a result, some studies have suggested that obesity should be looked at from a psychological point of view, that is, individuals' propensity to become addicted to the consumption of fat-rich foods. Although previous studies have supported this, the results have been inconclusive: methodologically and geographically. This study uses a robust approach to elicit the risk and time preferences of food consumers. It goes further to ascertain the correlations between these parameters and obesity. Despite the methodological and geographical differences, our results support a strong relationship between body mass Index and risk aversion, but not for loss aversion. In addition, time discounting significantly influences individuals' propensity to increase body mass Index.

The effects of message framing and healthcare provider recommendation on adult hepatitis B vaccination: A randomized controlled trial

Many adults in the U.S. do not receive recommended vaccines, and the research literature remains inconclusive on the best communication strategies for increasing this behavior. This study examined the association of message framing (gained-framed vs. loss-framed vs. control), and healthcare provider (HCP) recommendation (offered vs. recommended) on uptake of adult hepatitis B virus (HBV) vaccination in a high risk population using a 3 × 2 block design randomized controlled trial. Fear of shots, fear of vaccines, and perceived message framing were examined in secondary analyses. Of the 1747 participants, 47.7% (n = 833) received 0 doses of HBV vaccine, 27.8% (n = 485) received 1 dose, 10.4% received 2 doses, and 14.1% received all 3 recommended doses. There was not a significant interaction between message framing and HCP recommendation (p = .59). Mean number of doses received by the gain-framed group (m = 0.96) was not significantly different from the loss-framed group (m = 0.97, RR = 0.99, 95% CI = 0.88-1.12). However, those receiving any framing message received significantly more doses (m = 0.96) than those in the control condition (m = 0.81, RR = 1.17, 95%CI = 1.06-1.31). Participants who received a HCP recommendation received significantly more vaccine doses (m = 0.95) than those in the vaccine-offered condition (mean = 0.82, RR = 1.16, 95%CI = 1.05-1.28). These results suggest there is no difference in vaccine uptake between gain-frame and loss-frame messages, but both are better than a control message. These results also support advising HCP to provide a strong recommendation for vaccinations beyond merely offering it to patients. This study has implications for vaccine uptake beyond HBV, and can inform future research on effective vaccine communication research. Clinicaltrials.gov Identifier: NCT00739752. Registration date: August 20, 2008.

Improving outpatient satisfaction by extending expected waiting time

Background

Long waiting times result in low satisfaction. Although several methods are used to shorten the actual waiting time (AWT) in large hospitals of China, the outpatients still have a long actual waiting time. This study aimed to explore whether satisfaction could be improved by extending the expected waiting time (EWT) instead of shortening the AWT.

Methods

In October 2016, 257 students in grade one voluntarily participated in this study. They came from 6 classes, which were randomly divided into two groups: 3 classes comprised the control group (n = 125) and 3 classes comprised the experimental group (n = 132). Unfavorable information (UI) was given to the experimental group alone. Six distinct questionnaires were designed to explore the effects of UI on EWT and the effects of an extended EWT on satisfaction. Satisfaction scores ranged from 0 to 100: 0–25, very dissatisfied; 26–50, dissatisfied; 51–75, satisfied; 76–100, very satisfied. Each participant finished one of the 6 questionnaires online. Of the 257 questionnaires, 233 were valid.

Results

Before UI was given, the initial EWT (T₀) was similar between the control and experimental groups (Z = -1.924, P = 0.054). Under the effects of UI, individuals in the experimental group extended their EWT (T₁) from 121.0 to 180.0 min (Z = -6.367, P < 0.001). Females prolonged their EWT longer than males did (Z = -2.239, P = 0.025). Then, this study defined T₀ = 1.5 h and T₁ = 2.5 h, and compared the satisfaction scores between the control and experimental groups: a significant difference was found when AWT =2.0 h (t = − 3.568, P = 0.001), but not when AWT =3.0 h (t = − 0.718, P = 0.475) or when AWT =1.0 h (t = − 1.088, P = 0.280). When AWT =3.0 h, fewer individuals felt “very dissatisfied” in the experimental group (21.2%) than in the control group (44.7%) (χ² = 4.368, P = 0.037).

Conclusions

EWT was found to be extended greatly by UI. An extended EWT could improve satisfaction scores.

Electronic supplementary material

The online version of this article (10.1186/s12913-019-4408-3) contains supplementary material, which is available to authorized users.

A QALY loss is a QALY loss is a QALY loss: a note on independence of loss aversion from health states

Evidence has accumulated documenting loss aversion for monetary and, recently, for health outcomes-meaning that, generally, losses carry more weight than equally sized gains. In the conventional Quality-Adjusted Life Year (QALY) models, which comprise utility for quality and length of life, loss aversion is not taken into account. When measuring elements of the QALY model, commonly, the (implicit) assumption is that utility for length and quality of life are independent. First attempts to quantify loss aversion for QALYs typically measured loss aversion in the context of life duration, keeping quality of life constant (or vice versa). However, given that QALYs are multi-attribute utilities, it may be possible that the degree of loss aversion is dependent on, or inseparable from, quality of life and non-constant. We test this assumption using non-parametric methodology to quantify loss aversion, under different levels of quality of life. We measure utility of life duration for four health states within subjects, and present the results of a robustness test of loss aversion within the QALY model. We find loss aversion coefficients to be stable at the aggregate level, albeit with considerable heterogeneity at the individual level. Implications for applied work on prospect theory within health economics are discussed.

The relative merit of empirical priors in non-identifiable and sloppy models: Applications to models of learning and decision-making : Empirical priors

Formal modeling approaches to cognition provide a principled characterization of observed responses in terms of a set of postulated processes, specifically in terms of parameters that modulate the latter. These model-based characterizations are useful to the extent that there is a clear, one-to-one mapping between parameters and model expectations (identifiability) and that parameters can be recovered from reasonably sized data using a typical experimental design (recoverability). These properties are sometimes not met for certain combinations of model classes and data. One suggestion to improve parameter identifiability and recoverability involves the use of "empirical priors", which constrain parameters according to a previously observed distribution of values. We assessed the efficacy of this proposal using a combination of real and artificial data. Our results showed that a point-estimate variant of the empirical-prior method could not improve parameter recovery systematically. We identified the source of poor parameter recovery in the low information content of the data. As a follow-up step, we developed a fully Bayesian variant of the empirical-prior method and assessed its performance. We find that even such a method that takes the covariance structure of the parameter distributions into account cannot reliably improve parameter recovery. We conclude that researchers should invest additional efforts in improving the informativeness of their experimental designs, as many of the problems associated to impoverished designs cannot be alleviated by modern statistical methods alone.

Nonlinear decision weights or moment-based preferences? A model competition involving described and experienced skewness

The predictive power of cumulative prospect theory and expected utility theory is typically compared using decisions from description, where lotteries' outcome values and probabilities are explicitly stated. In decisions from experience, individuals sample (in the sampling paradigm without cost) from the return distributions to learn outcome values and their relative frequencies; here cumulative prospect theory and expected utility theory require the calculation of probabilities from experience. Individuals, however, may be more attuned to the experienced moments of outcome distributions, rather than the probabilities. We therefore test the mean-variance-skewness model, and retrieve the proportion of expected utility theory (over income), cumulative prospect theory, and mean-variance-skewness populations using a latent-class hierarchical Bayesian model across six large datasets. For simple lotteries (with 1-2 outcomes), we find a mixture of cumulative prospect theory and mean-variance-skewness populations in decisions from both description and experience. For more complex lotteries (with 2-3 outcomes), all participants are classified as cumulative prospect theory types in decisions from description, but as mean-variance-skewness types in decisions from experience. This suggests that in decisions from experience with more complex return distributions, preferences for skewness are more predictive than nonlinear probability weighting.

Risk attitudes of people with 'manageable' chronic disease: An analysis under prospect theory

Health promotion interventions can be improved using methods from behavioural economics to identify and target specific decision-making biases at the individual level. In this context, prospect theory provides a suitable framework within which decision-making processes can be operationalised. Focusing on a trade-off between health outcomes and behaviour change incurred by chronic disease management (lifestyle change, or 'self-management'), we are the first to measure the risk attitudes and quantify the full utility function under prospect theory of a patient population. We conducted a series of hypothetical elicitations over health outcomes associated with different self-management behaviours from a population of individuals with or without 'manageable' chronic disease (n = 120). We observed risk aversion in both the gain and the loss domains, as well as significant loss aversion. There seems to be an age effect on risk attitudes in this context, with younger people being on average less risk averse than older people. Our work addresses a need to better understand these decision-making processes, so that behaviour change interventions tailored to specific patient populations can be improved.

Choose Your Words Wisely: The Impact of Message Framing on Patients' Responses to Treatment Advice

Other people's words can have a powerful influence on how we interpret our environment, what we expect and experience, what we value, how we feel, what we choose, and how we behave. Placebo (and nocebo) effects are a dramatic example of this. The way in which healthcare professionals discuss, describe, and inform patients about the characteristic effects of a given disease and it prevention, diagnosis and treatment influence patients' feelings and expectations which in turn affects their psychobiological responses to, and subjective experiences and outcomes of the disease and its treatment effects. The effect of clinicians' words on patients' responses to treatments and procedures, both active and inert or sham is nothing less than incredible. The way in which information about treatment effects is delivered to patients can even reverse the clinically proven effects of an active treatment, or increase the adverse effects of it. In this chapter, we begin by presenting the data on the impact of message framing on affect and expectations of health care in experimental situations followed by the evidence that indicates how various patient, disease and clinician related factors modify framing effects in the clinic. Finally we discuss how framing effects affect clinical practice. They can be leveraged to enhance placebo effects and minimize nocebo effects. They can provide strategies to assist shared-decision making in the face of complex uncertainty. Going forward, automation of health care and artificial intelligence may change the delivery of health care but patients will continue to be humans seeking health gains while avoiding health losses and how the information is presented will always be susceptible to framing effects.

A pilot study of loss aversion for drug and non-drug commodities in cocaine users

BACKGROUND

Numerous studies in behavioral economics have demonstrated that individuals are more sensitive to the prospect of a loss than a gain (i.e., loss aversion). Although loss aversion has been well described in "healthy" populations, little research exists in individuals with substance use disorders. This gap is notable considering the prominent role that choice and decision-making play in drug use. The purpose of this pilot study was to evaluate loss aversion in active cocaine users.

METHODS

Current cocaine users (N=38; 42% female) participated in this within-subjects laboratory pilot study. Subjects completed a battery of tasks designed to assess loss aversion for drug and non-drug commodities under varying risk conditions. Standardized loss aversion coefficients (λ) were compared to theoretically and empirically relevant normative values (i.e., λ=2).

RESULTS

Compared to normative loss aversion coefficient values, a precise and consistent decrease in loss aversion was observed in cocaine users (sample λ≈1). These values were observed across drug and non-drug commodities as well as under certain and risky conditions.

CONCLUSIONS

These data represent the first systematic study of loss aversion in cocaine-using populations and provide evidence for equal sensitivity to losses and gains or loss equivalence. Futures studies should evaluate the specificity of these effects to a history of cocaine use as well as the impact of manipulations of loss aversion on drug use to determine how this phenomenon may contribute to intervention development efforts.

Just Add a Verse from the Quran: Effects of Religious Rhetoric in Gain- and Loss-Framed Anti-Alcohol Messages with a Palestinian Sample

This experiment investigated the effects of message framing (gain vs. loss) and religious rhetoric (religious vs. non-religious) on the expression of anti-alcohol civic intentions with a sample (N = 80) of Palestinian young adults. Results showed that the main effects of message framing (gain > loss) and religious rhetoric (non-religious > religious) on anti-alcohol civic intentions were significant. Furthermore, the study showed that viral behavioral intentions were strongly and significantly associated with expressing anti-alcohol civic intentions, with larger explanatory power for gain-framed PSAs that used a religious rhetoric. Additionally, a serial mediation model showed that the effect of religious rhetoric on anti-alcohol civic intentions was successfully mediated by the serial combination of attitudes toward the PSA and viral behavioral intention for gain-framed PSAs, but not for loss-framed PSAs. Findings are discussed within the framework of persuasion models.

A triple test for behavioral economics models and public health policy

We propose a triple test to evaluate the usefulness of behavioral economics models for public health policy. Test 1 is whether the model provides reasonably new insights. Test 2 is on whether these have been properly applied to policy settings. Test 3 is whether they are corroborated by evidence. We exemplify by considering the cases of social interactions models, self-control models and, in relation to health message framing, prospect theory. Out of these sets of models, only a correctly applied prospect theory fully passes the tests at present. Specifically, in broad agreement with the evidence, a gain frame has positive implications for welfare encourages disease prevention activity, though this does not apply if the perceived probability of the bad health outcome is large enough. We see our tests as being useful to identify how much health policy weight policy makers should assign to specific behavioral economic models; they are also useful to verify what next steps would be most useful in further research.

How the twain can meet: Prospect theory and models of heuristics in risky choice

Two influential approaches to modeling choice between risky options are algebraic models (which focus on predicting the overt decisions) and models of heuristics (which are also concerned with capturing the underlying cognitive process). Because they rest on fundamentally different assumptions and algorithms, the two approaches are usually treated as antithetical, or even incommensurable. Drawing on cumulative prospect theory (CPT; Tversky & Kahneman, 1992) as the currently most influential instance of a descriptive algebraic model, we demonstrate how the two modeling traditions can be linked. CPT's algebraic functions characterize choices in terms of psychophysical (diminishing sensitivity to probabilities and outcomes) as well as psychological (risk aversion and loss aversion) constructs. Models of heuristics characterize choices as rooted in simple information-processing principles such as lexicographic and limited search. In computer simulations, we estimated CPT's parameters for choices produced by various heuristics. The resulting CPT parameter profiles portray each of the choice-generating heuristics in psychologically meaningful ways-capturing, for instance, differences in how the heuristics process probability information. Furthermore, CPT parameters can reflect a key property of many heuristics, lexicographic search, and track the environment-dependent behavior of heuristics. Finally, we show, both in an empirical and a model recovery study, how CPT parameter profiles can be used to detect the operation of heuristics. We also address the limits of CPT's ability to capture choices produced by heuristics. Our results highlight an untapped potential of CPT as a measurement tool to characterize the information processing underlying risky choice.

Missed losses loom larger than missed gains: Electrodermal reactivity to decision choices and outcomes in a gambling task

Loss aversion is a defining characteristic of prospect theory, whereby responses are stronger to losses than to equivalently sized gains (Kahneman & Tversky Econometrica, 47, 263-291, 1979). By monitoring electrodermal activity (EDA) during a gambling task, in this study we examined physiological activity during risky decisions, as well as to both obtained (e.g., gains and losses) and counterfactual (e.g., narrowly missed gains and losses) outcomes. During the bet selection phase, EDA increased linearly with bet size, highlighting the role of somatic signals in decision-making under uncertainty in a task without any learning requirement. Outcome-related EDA scaled with the magnitudes of monetary wins and losses, and losses had a stronger impact on EDA than did equivalently sized wins. Narrowly missed wins (i.e., near-wins) and narrowly missed losses (i.e., near-losses) also evoked EDA responses, and the change of EDA as a function of the size of the missed outcome was modestly greater for near-losses than for near-wins, suggesting that near-losses have more impact on subjective value than do near-wins. Across individuals, the slope for choice-related EDA (as a function of bet size) correlated with the slope for outcome-related EDA as a function of both the obtained and counterfactual outcome magnitudes, and these correlations were stronger for loss and near-loss conditions than for win and near-win conditions. Taken together, these asymmetrical EDA patterns to objective wins and losses, as well as to near-wins and near-losses, provide a psychophysiological instantiation of the value function curve in prospect theory, which is steeper in the negative than in the positive domain.

Potential determinants of deductible uptake in health insurance: How to increase uptake in The Netherlands?

In health insurance, voluntary deductibles are offered to the insured in return for a premium rebate. Previous research has shown that 11 % of the Dutch insured opted for a voluntary deductible (VD) in health insurance in 2014, while the highest VD level was financially profitable for almost 50 % of the population in retrospect. To explain this discrepancy, this paper identifies and discusses six potential determinants of the decision to opt for a VD from the behavioral economic literature: loss aversion, risk attitude, ambiguity aversion, debt aversion, omission bias, and liquidity constraints. Based on these determinants, five potential strategies are proposed to increase the number of insured opting for a VD. Presenting the VD as the default option and providing transparent information regarding the VD are the two most promising strategies. If, as a result of these strategies, more insured would opt for a VD, moral hazard would be reduced.

Prospect theory and tax evasion: a reconsideration of the Yitzhaki puzzle

The standard expected utility (EUT) model of tax evasion predicts that evasion is decreasing in the marginal tax rate (the Yitzhaki puzzle). Recent literature shows cases in which incorporating prospect theory (PT) does and does not overturn the Puzzle. In a general environment that nests both PT and EUT preferences, we provide a detailed study of how the elements of PT affect the Puzzle. PT does not always reverse the Puzzle, hence we give and interpret conditions for when it does and does not. When allowing for stigma and/or variable audit probability, PT reverses the Puzzle in the same way and with the same limitations as does EUT, if equally augmented.