Testing process predictions of models of risky choice: a quantitative model comparison approach

This article presents a quantitative model comparison contrasting the process predictions of two prominent views on risky choice. One view assumes a trade-off between probabilities and outcomes (or non-linear functions thereof) and the separate evaluation of risky options (expectation models). Another view assumes that risky choice is based on comparative evaluation, limited search, aspiration levels, and the forgoing of trade-offs (heuristic models). We derived quantitative process predictions for a generic expectation model and for a specific heuristic model, namely the priority heuristic (Brandstätter et al., 2006), and tested them in two experiments. The focus was on two key features of the cognitive process: acquisition frequencies (i.e., how frequently individual reasons are looked up) and direction of search (i.e., gamble-wise vs. reason-wise). In Experiment 1, the priority heuristic predicted direction of search better than the expectation model (although neither model predicted the acquisition process perfectly); acquisition frequencies, however, were inconsistent with both models. Additional analyses revealed that these frequencies were primarily a function of what Rubinstein (1988) called “similarity.” In Experiment 2, the quantitative model comparison approach showed that people seemed to rely more on the priority heuristic in difficult problems, but to make more trade-offs in easy problems. This finding suggests that risky choice may be based on a mental toolbox of strategies.