scholarly journals Adaptation to recent outcomes attenuates the lasting effect of initial experience on risky decisions

2021 ◽  
Vol 11 (1) ◽  
Author(s):  
Andrea Kóbor ◽  
Zsófia Kardos ◽  
Ádám Takács ◽  
Noémi Éltető ◽  
Karolina Janacsek ◽  
...  
Keyword(s):  
Risk Taking ◽  
Change Point ◽  
Primacy Effect ◽  
Initial Experience ◽  
Risky Decision ◽  
Positive Events ◽  
Balloon Analogue Risk Task ◽  
Decision Environment ◽  
Risk Taking Behavior ◽  
The Impact

AbstractBoth primarily and recently encountered information have been shown to influence experience-based risky decision making. The primacy effect predicts that initial experience will influence later choices even if outcome probabilities change and reward is ultimately more or less sparse than primarily experienced. However, it has not been investigated whether extended initial experience would induce a more profound primacy effect upon risky choices than brief experience. Therefore, the present study tested in two experiments whether young adults adjusted their risk-taking behavior in the Balloon Analogue Risk Task after an unsignaled and unexpected change point. The change point separated early “good luck” or “bad luck” trials from subsequent ones. While mostly positive (more reward) or mostly negative (no reward) events characterized the early trials, subsequent trials were unbiased. In Experiment 1, the change point occurred after one-sixth or one-third of the trials (brief vs. extended experience) without intermittence, whereas in Experiment 2, it occurred between separate task phases. In Experiment 1, if negative events characterized the early trials, after the change point, risk-taking behavior increased as compared with the early trials. Conversely, if positive events characterized the early trials, risk-taking behavior decreased after the change point. Although the adjustment of risk-taking behavior occurred due to integrating recent experiences, the impact of initial experience was simultaneously observed. The length of initial experience did not reliably influence the adjustment of behavior. In Experiment 2, participants became more prone to take risks as the task progressed, indicating that the impact of initial experience could be overcome. Altogether, we suggest that initial beliefs about outcome probabilities can be updated by recent experiences to adapt to the continuously changing decision environment.

scholarly journals Initial experience has lasting effect on repeated risky decisions

2020 ◽  
Author(s):  
Andrea Kóbor ◽  
Zsófia Kardos ◽  
Ádám Takács ◽  
Noémi Éltető ◽  
Karolina Janacsek ◽  
...  
Keyword(s):  
Risk Taking ◽  
Change Point ◽  
Choice Behavior ◽  
Negative Events ◽  
Initial Experience ◽  
Positive Events ◽  
Balloon Analogue Risk Task ◽  
Risk Taking Behavior ◽  
The Difference ◽  
Subsequent Risk

AbstractPrimarily encountered information has been shown to influence perceptual and memory processes. However, it has been scarcely investigated how initial risk probabilities influence subsequent risk-taking behavior in an environment with repeated decisions. Therefore, the present study tested in two experiments whether young adults adjusted their choice behavior in the Balloon Analogue Risk task after an unsignaled and unexpected change point. The change point separated early trials from subsequent ones. While mostly positive (more reward) or mostly negative (no reward) events characterized early trials, subsequent trials were unbiased. In Experiment 1, the change point occurred after one-sixth or one-third of the trials without intermittence whereas in Experiment 2, it occurred between separate task phases. In Experiment 1, if negative events characterized the early trials, after the change point, risk-taking behavior increased as compared with the early trials. Conversely, if positive events characterized the early trials, risk-taking behavior decreased after the change point. Although participants shifted their choice behavior, the difference in risk taking due to initial experience remained, especially when this experience involved only one-sixth of the trials. In Experiment 2, slower adjustment of risk-taking behavior was observed after initially experiencing negative events than positive or baseline events. However, as all participants overcame the effect of initial experience, they became more prone to take risks. Altogether, results of both experiments not only suggest the profound effect of early experience but also that individuals dynamically update their risk estimates to adapt to the continuously changing environment.

Simple deterministic and complex probabilistic regularities underlying risky choices are acquired in a changing decision context

2021 ◽  
Author(s):  
Andrea Kóbor ◽  
Eszter Tóth-Fáber ◽  
Zsofia Kardos ◽  
Ádám Takács ◽  
Noémi Éltető ◽  
...  
Keyword(s):  
Risk Taking ◽  
Middle Phase ◽  
Risky Decision ◽  
Experimental Conditions ◽  
Balloon Analogue Risk Task ◽  
Decision Context ◽  
Two Factors ◽  
Decision Environment ◽  
Complex Hybrid ◽  
Fast Adaptation

Beliefs about positive and negative outcome probabilities have been frequently investigated in experience-based risky decision making. However, it has not been clarified how these beliefs emerge and whether they remain persistent if the predictability and complexity of outcome probabilities change across decision contexts. Hence, the present study manipulated these two factors in a variant of the Balloon Analogue Risk Task performed by healthy young adults. In the first and final task phases, outcomes (rewards or balloon bursts) were predictable because of the presence of an underlying regularity. In the middle phase, outcomes were unpredictable because the regularity was absent. The complexity of the regularity differed across the deterministic, probabilistic, and hybrid experimental conditions. In the simple deterministic condition, a repeating sequence of three deterministic regularities perfectly predicted balloon bursts. In the more complex probabilistic condition, a single probabilistic regularity ensured that the probability of balloon bursts increased with each successive pump. In the most complex hybrid condition, a repeating sequence of three different probabilistic regularities increased burst probabilities. Even without informing participants about the presence or absence of the regularity, sensitivity to both the simple deterministic and the most complex hybrid regularities emerged and influenced risk taking. Unpredictable outcomes of the middle phase did not deteriorate the acquired sensitivity to these regularities. When only a single probabilistic regularity was present, predictable and unpredictable outcomes were processed similarly. In conclusion, assuming the reappearance of the initially experienced regularity, the robustness of representations might serve fast adaptation in a volatile decision environment.

Dissecting the Effects of Disease and Treatment on Impulsivity in Parkinson's Disease

2012 ◽  
Vol 18 (6) ◽  
pp. 942-951 ◽  
Author(s):  
Alison C. Simioni ◽  
Alain Dagher ◽  
Lesley K. Fellows
Keyword(s):  
Parkinson’S Disease ◽  
Parkinson's Disease ◽  
Disease Progression ◽  
Risk Taking ◽  
Temporal Discounting ◽  
Baseline Risk ◽  
Neural Basis ◽  
Risky Decision ◽  
Balloon Analogue Risk Task

AbstractConverging evidence, including observations in patients with Parkinson's disease (PD), suggests that dopamine plays a role in impulsivity. This multi-faceted construct includes considerations of both time and risk; determining how these more specific processes are affected by PD and dopaminergic treatment can inform neurobiological models. We examined the effects of PD and its treatment on temporal discounting and risky decision-making in a cohort of 23 mild-moderate PD patients and 20 healthy participants. Patients completed the Balloon Analogue Risk Task and a temporal discounting paradigm both on and off their usual dopamine replacement therapy. PD patients did not differ from controls in their initial risk-taking on the Balloon Analogue Risk Task, but took progressively more risks across trials when on medication. A subset of patients and controls was tested again, 1.5–3 years later, to explore the effects of disease progression. On follow-up, baseline risk-taking diminished in patients, but the tendency to take increasing risks across trials persisted. Neither disease progression nor its treatment affected the temporal discounting rate. These findings suggest a different neural basis for temporal discounting and risk-taking, and demonstrate that risk-taking can be further decomposed into initial and trial-by-trial effects, with dopamine affecting only the latter. (JINS, 2012, 18, 1–10)

scholarly journals Can Risk-Taking Be an Endophenotype for Bipolar Disorder? A Study on Patients with Bipolar Disorder Type I and Their First-Degree Relatives

2013 ◽  
Vol 19 (4) ◽  
pp. 474-482 ◽  
Author(s):  
Ceren Hıdıroğlu ◽  
Özlem Demirci Esen ◽  
Zeliha Tunca ◽  
Şehnaz Neslihan Gűrz Yalçìn ◽  
Lauren Lombardo ◽  
...  
Keyword(s):  
Bipolar Disorder ◽  
Risk Taking ◽  
Outcome Measure ◽  
Bipolar Disorders ◽  
Type I ◽  
Balloon Analogue Risk Task ◽  
First Degree Relatives ◽  
Risk Taking Behavior ◽  
Disorder Type ◽  
Core Features

AbstractRisk-taking behavior and impulsivity are core features of bipolar disorder. Whether they are part of the inherited aspect of the illness is not clear. We aimed to evaluate risk-taking behavior as a potential endophenotype for bipolar disorders, and its relationship with impulsivity and illness features. The Balloon Analogue Risk Task (BART) and Barratt Impulsiveness Scale-11 (BIS-11) were used to assess risk-taking behavior and impulsivity respectively in 30 euthymic bipolar I patients (BD), their 25 asymptomatic first-degree relatives (BD-R), and 30 healthy controls (HC). The primary BART outcome measure was the behavioral adjustment score (number of pumps after trials where the balloon did not pop minus the number of pumps after trials where the balloon popped). BD (p< .001) and BD-R (p= .001) had similar and significantly lower adjustment scores than HC. Only BD scored significantly higher on BIS-11 total (p= .01) and motor (p= .04) subscales than HC. Neither the BART, nor impulsivity scores associated with illness features. A limitation of this study is medicated patients and a heterogeneous BD-R were included. Riskiness may be a candidate endophenotype for bipolar disorder as it appears independently from illness features, presents similarly in BD and BD-R groups and differs from impulsivity. (JINS, 2013,19, 1–9)

The impact of bank liquidity risk on risk-taking and bank lending: evidence from European bank

2021 ◽  
Vol 6 (2) ◽  
pp. 82-97
Author(s):  
Hongyan Liang ◽  
Zilong Liu
Keyword(s):  
Growth Rate ◽  
Risk Taking ◽  
Fixed Effects ◽  
Liquidity Risk ◽  
Bank Lending ◽  
Basel Iii ◽  
European Banks ◽  
Risk Taking Behavior ◽  
Loan Growth ◽  
The Impact

Objective – This paper uses a sample of annual observations of European banks to examine whether the liquidity risk affects a bank’s risk-taking behavior and its future loan growth. Methodology – A sample of European banks (27 member countries of the European Union plus U.K.) over the period of 2005 to 2019 are used in this study. Liquidity risk is measured by the ratio of liquid assets to total assets. Given the longitudinal nature of the data, the authors use panel regression with bank fixed effects to control for unobserved characteristics that might affect the dependent variable. Findings – The authors find that banks holding more liquid assets take less risk and show a higher subsequent loan growth rate. These results hold for both small and large banks. Novelty – To the authors’ best knowledge, this is one of the earliest studies to carefully examine the effects of liquidity risk on risk-taking behavior and loan growth rate for European banks. Our research suggests that the current Basel III requirement on liquidity ratio can decrease bank’s risking-taking behavior while not necessarily impact their future loan growth. Type of Paper: Empirical JEL Classification: G21, G01, G18. Keywords: Bank Liquidity Risk; Risk-taking Behavior; Loan Growth; Basel III

Capital regulation, competition and risk-taking behavior of Indian banks in a simultaneous approach

2018 ◽  
Vol 44 (4) ◽  
pp. 459-477 ◽  
Author(s):  
Santi Gopal Maji ◽  
Preeti Hazarika
Keyword(s):  
Human Capital ◽  
Risk Taking ◽  
Value Added ◽  
Capital Adequacy ◽  
Bank Risk ◽  
Capital Regulation ◽  
Content Type ◽  
Risk Taking Behavior ◽  
Indian Banks ◽  
The Impact

Purpose The purpose of this paper is to investigate the association between capital regulation and risk-taking behavior of Indian banks after incorporating the influence of competition. Further, the study intends to enrich the existing literature by providing empirical evidence on the role of human resources in managing risk along with the influence of other bank specific and macroeconomic variables. Design/methodology/approach Secondary data on 39 listed Indian commercial banks are collected from “Capitaline Plus” corporate data database for a period of 15 years. Capital is measured by capital adequacy ratio as defined by the regulators, and two definitions of risk – credit risk and insolvency risk – are employed. Competition is measured by Herfindahl-Hirschman deposits index, concentration ratio and H-statistic. The value-added intellectual coefficient model is employed to compute human capital efficiency (HCE). Three-stage least squares technique in a simultaneous equation framework is used to estimate the coefficients. Findings The study finds that absolute level of regulatory capital and bank risk are positively associated, although the influence of capital on risk is not statistically significant. The influence of competition on risk is negative for all the models, which supports the “competition stability” view. The impact of human capital on bank risk is also negative for all cases. Practical implications The findings of the study are useful for the decision makers in several ways based on the inverse influence of competition and HCE on bank risk. Further, the observed positive association between capital and risk indicates that the capital regulation is not sufficient to enhance the stability in the banking sector. Originality/value This is the first study in the Indian context that incorporates the competition in the banking industry as an explanatory variable in the extant bank capital and risk relationship.

scholarly journals Modernizing Conceptions of Valuation and Cognitive-Control Deployment in Adolescent Risk Taking

2019 ◽  
Vol 29 (1) ◽  
pp. 102-109 ◽  
Author(s):  
Kathy T. Do ◽  
Paul B. Sharp ◽  
Eva H. Telzer
Keyword(s):  
Decision Making ◽  
Control System ◽  
Cognitive Control ◽  
Computational Model ◽  
Risk Taking ◽  
Expected Value ◽  
Risky Decision Making ◽  
Risky Decision ◽  
Adolescent Risk ◽  
Risk Taking Behavior

Heightened risk taking in adolescence has long been attributed to valuation systems overwhelming the deployment of cognitive control. However, this explanation of why adolescents engage in risk taking is insufficient given increasing evidence that risk-taking behavior can be strategic and involve elevated cognitive control. We argue that applying the expected-value-of-control computational model to adolescent risk taking can clarify under what conditions control is elevated or diminished during risky decision-making. Through this lens, we review research examining when adolescent risk taking might be due to—rather than a failure of—effective cognitive control and suggest compelling ways to test such hypotheses. This effort can resolve when risk taking arises from an immaturity of the control system itself, as opposed to arising from differences in what adolescents value relative to adults. It can also identify promising avenues for channeling cognitive control toward adaptive outcomes in adolescence.

scholarly journals When imitating successful others fails: Accidentally successful exemplars inspire risky decisions and can hamper performance

2020 ◽  
Vol 73 (6) ◽  
pp. 941-956
Author(s):  
Wijnand AP van Tilburg ◽  
Nikhila Mahadevan
Keyword(s):  
Decision Making ◽  
Social Influence ◽  
Risk Taking ◽  
Social Contexts ◽  
Gambling Behaviour ◽  
Risky Decision Making ◽  
Regression To The Mean ◽  
Risky Behaviour ◽  
Risky Decision ◽  
The Impact

We examined the impact of viewing exemplars on people’s behaviour in risky decision-making environments. Specifically, we tested if people disproportionally choose to view and then imitate the behaviour of successful (vs. unsuccessful) others, which in the case of risky decision-making increases risk-taking and can hamper performance. In doing so, our research tested how a fundamental social psychological process (social influence) interacts with a fundamental statistical phenomenon (regression to the mean) to produce biases in decision-making. Experiment 1 ( N = 96) showed that people indeed model their own behaviour after that of a successful exemplar, resulting in more risky behaviour and poorer outcomes. Experiment 2 ( N = 208) indicated that people disproportionately choose to examine and then imitate most successful versus least successful exemplars. Experiment 3 ( N = 381) replicated Experiment 2 in a context where participants were offered the freedom to examine any possible exemplar, or no exemplar whatsoever, and across different incentive conditions. The results have implications for decision-making in a broad range of social contexts, such as education, health, and finances where risk-taking can have detrimental outcomes, and they may be particularly helpful to understand the role of social influence in gambling behaviour.

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