Choice in the repeated-gambles experiment.

Area of Science:

• Behavioral Economics
• Cognitive Psychology
• Decision Science

Background:

• Understanding factors influencing risky choices is crucial in behavioral economics.
• Previous models of risky choice have focused on reinforcement history and temporal discounting.

Purpose of the Study:

• To investigate the impact of intertrial interval duration and framing effects on human risky choice behavior.
• To compare the explanatory power of prospect theory versus a behavioral account of risky choice.

Main Methods:

• Participants made repeated choices between two roulette wheels with varying probabilities and payouts.
• Intertrial interval duration, session start conditions, and initial monetary framing were manipulated across three experiments.
• A titration procedure estimated indifference points between risky alternatives.

Main Results:

• Increased intertrial interval duration led to greater risk aversion.
• Framing of potential gains (e.g., starting with $10 vs. $10,000) significantly reduced risk aversion.
• Intertrial interval duration did not affect choice in all experimental conditions.

Conclusions:

• Prospect framing significantly influences risky decision-making, more so than temporal factors.
• Kahneman and Tversky's prospect theory provides a more robust explanation for observed risky choices than traditional behavioral models.