To maximize or randomize? An experimental study of probability matching in financial decision making.
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ABSTRACT:
SUBMITTER: Lo AW
PROVIDER: S-EPMC8389367 | biostudies-literature |
REPOSITORIES: biostudies-literature
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Project description:Probability matching is a classic theory of decision making that was first developed in models of cognition. Posterior probability matching, a variant in which observers match their response probabilities to the posterior probability of each response being correct, is being used increasingly often in models of perception. However, little is known about whether posterior probability matching is consistent with the vast literature on vision and hearing that has developed within signal detection theory. Here we test posterior probability matching models using two tools from detection theory. First, we examine the models' performance in a two-pass experiment, where each block of trials is presented twice, and we measure the proportion of times that the model gives the same response twice to repeated stimuli. We show that at low performance levels, posterior probability matching models give highly inconsistent responses across repeated presentations of identical trials. We find that practised human observers are more consistent across repeated trials than these models predict, and we find some evidence that less practised observers more consistent as well. Second, we compare the performance of posterior probability matching models on a discrimination task to the performance of a theoretical ideal observer that achieves the best possible performance. We find that posterior probability matching is very inefficient at low-to-moderate performance levels, and that human observers can be more efficient than is ever possible according to posterior probability matching models. These findings support classic signal detection models, and rule out a broad class of posterior probability matching models for expert performance on perceptual tasks that range in complexity from contrast discrimination to symmetry detection. However, our findings leave open the possibility that inexperienced observers may show posterior probability matching behaviour, and our methods provide new tools for testing for such a strategy.
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Project description:Financial abilities (FA) are a multi-dimensional domain comprising a wide range of conceptual, pragmatical, and judgmental skills ranging from basic abilities, such as bill payment, to high level abilities, such as financial decision-making (FDM). Preserved FDM abilities include the capacity to recognize fraud attempts, and they are fundamental for a person’s independence. Previous studies have reported decreased FDM in older adults and in patients with mild cognitive impairment (MCI), who consequently become more susceptible to fraud attempts. However, FDM has scarcely been investigated in other neurological populations, and it is unclear whether FDM may be predicted by more basic FA. The aim of the present study was to investigate FDM across patients with MCI, Parkinson’s disease (PD), or stroke, as well as healthy controls (HC), and to explore to what extent FDM could be inferred by other FA. We collected FDM and FA performances using the NADL-F short battery. Performances in the NADL-F short subtests were compared among groups. Additionally, the relationship between the scores at the FDM subtest and the performance obtained in other financial subtests of the NADL-F short were investigated for each group of participants. MCI patients performed worse than HC in FDM and in several FA domains. Conversely, FDM was relatively preserved in our sample of PD and stroke patients. In HC, FDM was associated with numeracy and financial knowledge applied to everyday situations, whereas this was true with some basic FA in both MCI and PD patients. No significant association was observed in stroke patients. Our results suggest that FDM is a complex ability, only partially inferable from other FA.
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Project description:History matching is the process of modifying the uncertain attributes of a reservoir model to reproduce the real reservoir performance. It is a classical reservoir engineering problem and plays an important role in reservoir management since the resulting models are used to support decisions in other tasks such as economic analysis and production strategy. This work introduces a dynamic decision-making optimization framework for history matching problems in which new models are generated based on, and guided by, the dynamic analysis of the data of available solutions. The optimization framework follows a 'learning-from-data' approach, and includes two optimizer components that use machine learning techniques, such as unsupervised learning and statistical analysis, to uncover patterns of input attributes that lead to good output responses. These patterns are used to support the decision-making process while generating new, and better, history matched solutions. The proposed framework is applied to a benchmark model (UNISIM-I-H) based on the Namorado field in Brazil. Results show the potential the dynamic decision-making optimization framework has for improving the quality of history matching solutions using a substantial smaller number of simulations when compared with a previous work on the same benchmark.
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Project description:OBJECTIVES:The objectives of this study were threefold: (1) to empirically test the conceptual model proposed by the Lichtenberg Financial Decision-making Rating Scale (LFDRS); (2) to examine the psychometric properties of the LFDRS contextual factors in financial decision-making by investigating both the reliability and convergent validity of the subscales and total scale, and (3) extending previous work on the scale through the collection of normative data on financial decision-making. METHODS:A convenience sample of 200 independent function and community dwelling older adults underwent cognitive and financial management testing and were interviewed using the LFDRS. Confirmatory factor analysis, internal consistency measures, and hierarchical regression were used in a sample of 200 community-dwelling older adults, all of whom were making or had recently made a significant financial decision. RESULTS:Results confirmed the scale's reliability and supported the conceptual model. Convergent validity analyses indicate that as hypothesized, cognition is a significant predictor of risk scores. Financial management scores, however, were not predictive of decision-making risk scores. CONCLUSIONS:The psychometric properties of the LFDRS support the scale's use as it was proposed. CLINICAL IMPLICATIONS:The LFDRS instructions and scale are provided for clinicians to use in financial capacity assessments.
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Project description:The decision-making literature distinguishes one maximizing style from another satisficing decision-making style, but it is unknown whether these styles remain stable or are variable depending on the occasion. One way to approach it is to verify eventual generalization of these styles in behavior of people in different decision domains. Some incipient results with University students from the United States and Austria suggest that these styles would remain in three different domains. However, it is unknown if this is the case in adults, other cultures, or vital areas of great relevance, such as health and personal finances. The objective here is to identify if Chilean Latin American participants of different sex and age maintain their decision-making style in five different decision domains. The sample was 343 volunteers, 52.6% men, from two regions of central-southern Chile (Maule and Ñuble), aged between 20 and 90 years (M = 45.47; SD = 16.05), who answered the Maximization Tendency Scale, and 45 items corresponding to five different decision domains: health, life decision, finances, services and experiences, and consumer's good. An apparent coherence of decision-making style-maximizing and satisficing-was obtained in the five domains. The health domain stands out for being the one in which it is maximized and with greater internal homogeneity.
| S-EPMC8335592 | biostudies-literature
Project description:Background/objectivesCross-sectional research has demonstrated weight-related stigma and discrimination, however experimental research providing causal evidence of financial-based weight discrimination is lacking. The aim of these preregistered experiments was to examine whether a novel paradigm in which participants attributed financial rewards and punishments could be used to detect weight bias.Subjects/methodsOne-hundred and twenty-one individuals participated in experiment 1 and one-hundred and sixty-six individuals participated in experiment 2. Both studies were conducted online, and participants were provided with biographies of hypothetical individuals in which weight-status was manipulated (normal weight vs. overweight/obesity) before being asked to provide rewards and punishments on their cognitive performance. In experiment 1 (within-participants design) participants observed one individual they believed to be normal weight and one individual they believed to be overweight/have obesity. In experiment 2 (between-participants design) participants observed one individual whilst also being provided with information about food addiction (Food addiction is real + individual with overweight/obesity vs. food addiction is a myth + individual with overweight/obesity vs control + individual with normal weight).ResultsIn experiment 1, participants punished individuals who were described as having overweight/obesity to a greater extent to individuals who were normal weight (Hedge's g = -0.21 [95% CI: -0.02 to -0.41], p = 0.026), but there was no effect on rewards. They were also less likely to recommend individuals with overweight/obesity to pass the tasks (X2(1) = 10.05, p = 0.002). In experiment 2, participants rewarded individuals whom they believed were overweight/obese to a lesser extent than normal-weight individuals (g = 0.49 [95% CI: 0.16 to 0.83]. There was no effect on punishment, nor any impact of information regarding food addiction as real vs a myth.ConclusionUsing a novel discrimination task, these two experiments demonstrate causal evidence of weight-based discrimination in financial decision making.
| S-EPMC9239905 | biostudies-literature
Project description:Delay discounting, as a behavioral measure of impulsive choice, is strongly related to substance abuse and other risky behaviors. Therefore, effective techniques that alter delay discounting are of great interest. We explored the ability of a semester long financial education course to change delay discounting. Participants were recruited from a financial education course (n = 237) and an abnormal psychology course (n = 80). Both groups completed a delay-discounting task for $100 during the first two weeks (Time 1) of the semester as well as during the last two weeks (Time 2) of the semester. Participants also completed a personality inventory and financial risk tolerance scale both times and a delay-discounting task for $1,000 during Time 2. Delay discounting decreased in the financial education group at the end of the semester whereas there was no change in delay discounting in the abnormal psychology group. Financial education may be an effective method for reducing delay discounting.
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Project description:BACKGROUND:Explicit consideration of anticipated regret is not part of the standard shared decision-making protocols. This pilot study aimed to compare decisions about a hypothetical surgery for breast cancer and examined whether regret is a consideration in treatment decisions. METHODS:In this randomized experimental study, 184 healthy female volunteers were randomized to receive a standard decision aid (control) or one with information on post-surgical regret (experimental). The main outcome measures were the proportion of subjects choosing lumpectomy vs. mastectomy and the proportion reporting that regret played a role in the decision made. We hypothesized that a greater proportion of the experimental group (regret-incorporated decision aid) would make a surgical treatment preference that favored the less regret-inducing option and that they would be more likely to consider regret in their decision-making process as compared to the control group. RESULTS:A significantly greater proportion of the experimental group subjects reported regret played a role in their decision-making process compared to the control counterparts (78 vs. 65 %; p?=?0.039). Recipients of the regret-incorporated experimental decision aid had a threefold increased odds of choosing the less regret-inducing surgery (OR?=?2.97; 95 % CI?=?1.25, 7.09; p value?=?0.014). CONCLUSIONS:In this hypothetical context, the incorporation of regret in a decision aid for preference-sensitive surgery impacted decision-making. This finding suggests that keying in on anticipated regret may be an important element of shared decision-making strategies. Our results make a strong argument for applying this design and pursuing further research in a surgical patient population. TRIAL REGISTRATION:Clinicaltrials.gov, NCT02563808.
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Project description:Dopamine has been associated with risky decision-making, as well as with pathological gambling, a behavioral addiction characterized by excessive risk-taking behavior. However, the specific mechanisms through which dopamine might act to foster risk-taking and pathological gambling remain elusive. Here we test the hypothesis that this might be achieved, in part, via modulation of subjective probability weighting during decision making. Human healthy controls (n = 21) and pathological gamblers (n = 16) played a decision-making task involving choices between sure monetary options and risky gambles both in the gain and loss domains. Each participant played the task twice, either under placebo or the dopamine D2/D3 receptor antagonist sulpiride, in a double-blind counterbalanced design. A prospect theory modelling approach was used to estimate subjective probability weighting and sensitivity to monetary outcomes. Consistent with prospect theory, we found that participants presented a distortion in the subjective weighting of probabilities, i.e., they overweighted low probabilities and underweighted moderate to high probabilities, both in the gain and loss domains. Compared with placebo, sulpiride attenuated this distortion in the gain domain. Across drugs, the groups did not differ in their probability weighting, although gamblers consistently underweighted losing probabilities in the placebo condition. Overall, our results reveal that dopamine D2/D3 receptor antagonism modulates the subjective weighting of probabilities in the gain domain, in the direction of more objective, economically rational decision making.
| S-EPMC5889481 | biostudies-literature
Project description:ObjectiveDecades of research have established how to measure metacognition (i.e., awareness of one's cognitive abilities), whereas relatively little is known about how to assess the integrity of financial awareness (FA; awareness of one's financial abilities), a related construct with practical implications for vulnerable older adults. The current study's goal was to apply established metacognitive frameworks to identify an objective measure of FA.MethodsMetacognitive ratings were integrated into two financial decision making (FDM) assessments in order to derive two types of FA metrics: absolute accuracy (calibration) and relative accuracy (resolution) in each FDM task. Associations between each FA metric, demographic variables, FDM performances, and metamemory were examined.Design & settingCross-sectional, community-based, prospective study.Participants93 individuals with mean age = 59 years (SD = 15.12); mean education = 15.70 (SD = 2.39); 60% females.MeasuresFA was calculated using the Financial Competency Assessment Inventory (FCAI) and Decision Making Competence Assessment Tool, Finance Module (DMC-F), and memory awareness was calculated using an objective metamemory test.ResultsNone of the FA metrics was associated with age, education or gender. FCAI calibration was inversely associated with FDM, and positively correlated with DMC-F calibration and metamemory calibration. None of the FA metrics for DMC-F was associated with metamemory.ConclusionsMirroring findings from metamemory studies, overconfidence in FDM was associated with lower FDM accuracy in healthy adults. Moreover, calibration scores on the FCAI and metamemory were related, suggesting that FA taps into metacognitive abilities. Our findings provide preliminary evidence for how to measure FA in both clinical and research contexts.
| S-EPMC7332073 | biostudies-literature