City Research Online

Abstract

Savage’s rational axiom of decision making under uncertainty, called the ‘Sure Thing’ principle,was purportedly falsified in a two-stage gamble paradigm by Tversky and Shafir (1992). This workrevealed that participants would take a second-stage gamble for both possible outcomes of the initial-stage gamble, but would significantly depress this choice whennoinformation was available on theoutcome of the initial-stage gamble. Subsequent research has reported difficulty to replicate thisDisjunction Effect in the two-stage gamble paradigm. We repeated this simulated two-stage gambleparadigm in an online study (N=1119) but adapted the range of payoff amounts, and controlled theorder of the blocks of two-stage gambles with, respectively without, information on the outcomeof the first-stage gamble. The main empirical contributions of this study are that more risk averseparticipants produced i) a reliable order effect in relation to the Disjunction Effect and the violationof the Law of Total Probability, and ii) a novel inflation effect on gambling in the Unknown outcomecondition analogous but opposite to the Disjunction Effect when Unknown outcome conditionedtwo-stage gambles precede the Known outcome conditioned ones. By contrast, we found that lessrisk averse participants produced neither of these effects. We discuss the underlying choice processesand compare the effectiveness of a logistic model, a Markov model and a quantum-like model. Ourmain theoretical findings are i) a standard utility model and a Markov model using heuristic linearutility, contextual influence and carry-over effect cannot accommodate the present empirical results,and ii) a model based on quantum dynamics, matched in form to the Markov model, can successfullydescribe all major aspects of our data.

Publication Type:	Article
Additional Information:	© 2019 Elsevier. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords:	Two-stage Gambles, Disjunction Effect, Order Effect, carry-over Effect, MarkovProcess, Quantum Probability, Interference Effect
Subjects:	B Philosophy. Psychology. Religion > BF Psychology
Departments:	School of Health & Psychological Sciences > Psychology
SWORD Depositor:	Symplectic Administrator

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