Prospect theory reflects selective allocation of attention

Area of Science:

• Cognitive Psychology
• Decision Science
• Behavioral Economics

Background:

• Cumulative Prospect Theory (CPT) models risky choice but often overlooks predecisional information processing.
• Expectation models like CPT typically assume choices reflect computations, not the underlying information processing itself.

Purpose of the Study:

• To investigate the link between key psychological constructs in CPT and attention allocation during decision-making.
• To determine if attention allocation influences choice regularities captured by CPT.

Main Methods:

• Two experiments were conducted, employing process tracing to monitor participants' attention allocation to outcome and probability information.
• Experiment 1 estimated CPT parameters from choices and correlated them with attention allocation.
• Experiment 2 manipulated attention to losses/gains to observe effects on CPT parameters.

Main Results:

• Individual differences in CPT parameters (loss aversion, outcome/probability sensitivity) were systematically associated with attention allocation patterns.
• Loss aversion correlated with attention to gains versus losses; a curved weighting function correlated with less attention to probabilities.
• Manipulating attention to losses or gains systematically altered CPT's loss-aversion parameter.

Conclusions:

• Attention allocation is linked to CPT parameters, demonstrating how information processing characteristics can be reflected in choice models.
• Findings suggest CPT's 'as-if' models can reveal insights into information processing.
• The identified links between CPT and attention can inform the development of process models for risky choice.