Losses loom larger than gains - Die Prospect Theory (German Edition)

Losses loom larger than gains - Die Prospect Theory (German by Martin Apfel
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In fact, a paper examining behavioral economics of childhood overweight and obesity called for a more thorough examination of constructs of prospect theory Ehmke et al. Our study aimed to develop a novel decision-making paradigm that allows us to apply prospect theory in behavioral economics to body mass. Critically, the subjective value of weight gaining weight or losing weight may not correspond to the absolute weight value.

We believe that understanding mechanisms of psychological valuation of body weight would provide important information for obesity research as well as successful weight management. The current study is designed to further our understanding of the relationship between body mass index BMI and psychological constructs within prospect theory.

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Write a customer review. Separately for monetary choices and weight-loss choices, we fitted the data using maximum likelihood, with the log likelihood function implemented with the MATLAB software MathWorks, Natick, MA to estimate prospect theory model parameters. It also has had an enormous impact on marketing. National Center for Biotechnology Information , U. The neural basis of loss aversion in decision-making under risk.

We hypothesized that the psychological phenomenon of risk preference and loss aversion would be observed related to body weight for individuals who have a desire to lose their weight, and the individual difference in prospect model parameters from weight-loss choices would be specifically correlated to body mass and obesity-related psychological variables.

Sixty-seven healthy college students with a mean age of Participants received course credits for participating in the experiment. The WLOC includes two internal control items and two external control items. The Cronbach's alpha coefficient in this study was 0. The BSQ Cooper et al. It has been used to assess eating disorder pathology in clinical settings Anderson et al.

The Cronbach's alpha of the BSQ in this study was 0. The EBI O'neil et al. The EBI is known to be consistently sensitive to successful behavioral weight management interventions O'neil and Rieder, The Cronbach's alpha of the EBI in this study was 0. The latter five participants, who may approach decisions about losing weight differently than individuals in other two groups, were excluded from further data analyses. Participants completed two probabilistic decision-making tasks for monetary rewards and weight-loss based on prospect theory.

Each task contained forced binary choice trials. All choices were hypothetical, but participants were encouraged to consider their choices that could be implemented as real outcomes i. Monetary choice sets were taken from Sokol-Hessner and colleagues' study Sokol-Hessner et al. The exact same values from the monetary reward choice set were used for the body-weight choice set, but shown in a unit of body weight pounds instead of the U. Note that our conversion does not necessarily equate utilities of gambles from two different domains, nor make them directly comparable, which were not our research goals.

Choices were presented in random order. A choice set was displayed on monitor screen until a button press. After a button press, only the chosen option remained on the screen for an additional 0. Every trial was separated by an inter-trial-interval of a 1. The experimental schedule of stimulus presentation and behavioral data acquisition were programmed using Presentation software Neurobehavioral System, Berkeley, CA. Sample displays of choice sets [ A monetary choice, B weight-loss choice] are shown. Participants were required to make forced choices between the two hypothetical options.

Each individual participant's prospect theory model parameters were estimated through a nonlinear stochastic choice model following approaches described in the previous study Sokol-Hessner et al. From Kahneman and Tversky's prospect theory Kahneman and Tversky, , the participant's utility value functions were represented as two parts of a power function by the sign of x values gains: We estimated utility functions separately for monetary rewards and body-weight loss choices.

For body-weight loss choices, the weight-loss was conceptualized as a gain domain that implies potential motivational incentives, while the weight-gain was conceptualized as a loss domain. Note that we excluded those five participants who expressed a desire to gain body weight as described before. We selected two-risk preference parameters model rather than one-risk preference parameter model i.

Similarly, by applying the prospect theory model to weight-loss choices, we can predict that weight-loss risk-seeking individuals would likely to choose the risky weight-loss option over the guaranteed weight-loss option, while risk-averse individuals would likely to choose the opposite. For our body-weight loss choices, the weight-gain was treated as a negative consequence.

Model parameter estimations were performed following Sokol-Hessner et al. Separately for monetary choices and weight-loss choices, we fitted the data using maximum likelihood, with the log likelihood function implemented with the MATLAB software MathWorks, Natick, MA to estimate prospect theory model parameters.

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Here, y i represents the choice of participant in trial i 1 for gamble choices, 0 for guaranteed alternative choices. See Sokol-Hessner et al. Parameter estimations and comparisons were performed separately for weight-loss and monetary choices.

Prospect Theory

Next, we performed exploratory correlations and multiple linear regression analyses with the prospect theory model parameters, BMI, and psychosocial variables included in our study. Therefore, we have summarized statistical results separately for unsatisfactory i. For each participant, we fitted the prospect theory model parameters separately for weight-loss choices and monetary choices. Prospect theory model parameters for unsatisfactory and satisfactory groups.

Means and standard errors are shown. To explore how prospect theory model parameters for weight-loss choices and monetary choices, we computed pairwise correlations between two modalities. Our result suggests that weight-related risk preference and weight-gain aversion attitudes share common variance with risk preference and loss aversion attitudes estimated from traditional monetary choices, and demonstrates convergent validity in the individuals who want to lose weight.

To investigate the relationship between prospect theory model parameters and obesity, we performed correlational analyses separately for the unsatisfactory and satisfactory groups. In other words, obese individuals who want to lose weight tend to choose risky uncertain weight-loss options rather than safe certain weight-loss options e. Our weight-loss choices employed the absolute amount of potential weight loss or gain. To rule out this possibility, we performed additional partial correlation analysis with a rating of the percentage of weight loss or gain to want to achieve.

Also, not surprisingly, no significant correlation between BMI scores and risk preference parameters existed in the satisfactory group. Scatter plot between weight-loss risk preference parameters and BMI scores in satisfactory group. Note significant correlation even after removing an individual with BMI of Pearson correlations between prospect theory risk-seeking and weight-loss aversion parameters and self-report scales in unsatisfactory and satisfactory groups.

This result suggests that weight-gain aversion estimated via prospect theory is closely associated with active behavioral involvement for successful weight-loss. For completeness, we checked additional correlations between the estimated parameters from monetary choices and self-report scales. As expected, none of correlations was significant in both groups, confirming the specificity of prospect theory parameters for weight-loss.

This study demonstrates that prospect theory, widely utilized to understand human economic decisions, can also be applied to other domains. It can provide novel and valuable information to understand underlying decision-making mechanisms related to obesity. Daily decisions are critical determinants for a healthy life. Foods we choose to eat energy intake and if and how much we exercise energy expenditure directly affect our weight status. In prospect theory, the value of outcome does not necessarily correspond to the objective, monetary value.

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Our results demonstrate that neither does the objective value of weight correspond to the absolute weight value. The psychological parameters estimated from weight-loss choices displayed similar characteristics to the monetary choices in individuals who desired to lose weight, showing significant correlations for risk preference and loss aversion parameters. Furthermore, we confirmed and better characterized weight-gain aversion similar to loss aversion for monetary values in both unsatisfactory and satisfactory groups.

In other words, participants detest weight gain about twice as much as they enjoy weight-loss. The relative ratio of weight-gain aversion in the unsatisfactory and satisfactory groups were 2.

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Although this single study cannot determine why people detest weight-gain more than they like weight-loss, a positive correlation between two loss aversion model parameters in the unsatisfactory group suggest that loss aversion for monetary loss and weight gain may share common underlying mechanisms. It has been suggested that hypersensitive to losses is driven by or mediated by negative emotions such as fear or anxiety Camerer, Thus, weight-gain aversion observed in our study also might be driven by fear of being obese.

A neuroimaging study showed that individual indifferences in loss aversion in monetary choices correlate with brain activities in the ventral striatum and prefrontal cortex Tom et al. Thus, it would be interesting to explore underlying neurobiological mechanisms of weight gain aversion in future studies. We also observed the unique role for prospect theory's weight-gain aversion in relation to psychological variables.

In our study, individuals who want to lose weight showed a increased tendency for risky choices for weight-loss, compared to individuals who are satisfied with their current weight. Also, the risk-seeking parameter for weight-loss was positively correlated with body mass in the individuals who had a desire to lose their body weight, while the risk-seeking parameter for monetary rewards was not. A positive correlation between the risk-seeking for weight-loss and body mass was observed even after statistically controlling for the percentage amount of weight-loss wishes, suggesting that the amounts of desired weight loss might be not a critical factor that determines the relationship between risk-seeking for weight-loss and the body mass.

Considering the previous research on the impulsivity and reward sensitivity in obesity Nederkoorn et al. Also, the risk-seeking choices might share overlapping executive control mechanisms that have been shown to be affected by carrying excess body weight Verdejo-Garcia et al. The present study further elucidates relations between risk-seeking for weight-loss and other psychological variables. Interestingly, the risk-seeking for weight-loss was related to the BSQ scores in our study.

CRITICAL THINKING - Cognitive Biases: Reference Dependence and Loss Aversion [HD]

The BSQ, measures body shape preoccupation or concern often typically observed in eating disorders Cooper et al. In regression analyses, BMI and BSQ significantly predicted risk-seeking for weight-loss even after controlling for the effects of other variables. Our data suggests that increased concern with body shape as well as excessive body mass may be uniquely associated with risk-seeking behaviors for weight-loss. On the other hand, aversion to weight-gain itself was not correlated with BMI, but it was positively correlated with EBI that measures behavioral involvement for weight management.

Higher scores on the EBI indicate greater adoption of behaviors that are linked with successful weight-loss e. Previous studies demonstrated that EBI is a sensitive predictor for weight-loss O'neil et al. Thus, weight-gain aversion may serve as a motivational factor for active weight management behaviors in daily life. Utilizing weight-loss choices from prospect theory provides valuable information that more general prospect theory parameters based on monetary values fails to predict.

That is, prospect theory may provide a unique, individually-tailored therapeutic perspective for decision-making to achieve a healthier energy balance. As demonstrated through our results, applying prospect theory in obesity enables us to describe exact subjective weight-value function for each individual, which cannot be achieved through other decision-making tasks that have been applied in obesity research e.

However, there are several caveats.

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Losses loom larger than gains - Die Prospect Theory (German Edition) - Kindle edition by Martin Apfel. Download it once and read it on your Kindle device, PC. LOSSES LOOM LARGER THAN GAINS DIE PROSPECT THEORY GERMAN EDITION - In this site isn`t the same as a solution manual you buy in a book store.

Also, it is still uncertain whether weight-loss risk-seeking and weight-gain aversion are malleable or stable traits. Recent studies demonstrate cognitive and affective regulation strategies can change parameters of prospect theory for monetary choices Thaler et al.

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Thus, our finding may be helpful for future research to apply prospect theory to change obesogenic decision-making mechanisms food and weight-management related behaviors. Self-control interventions that directly target risk-seeking decision-making might be effective in weight-management in obese individuals. As mentioned in our introduction, several recent studies showed overweight and obese individuals are more lkely to choose smaller, more immediate monetary rewards Borghans and Golsteyn, ; Weller et al. Future studies that explore whether temporal discounting future rewards is related to the risk-seeking tendency for weight-loss would be informative.

We acknowledge that our study utilized a sample of college students and in order to generalize our findings, future studies with larger samples including both community and clinical populations will be required. A more complete understanding of the complex relations between body mass and weight-loss risk-seeking and weight-gain aversion could inform health behavior interventions.

Changing the process of how we decide may ultimately help us make healthier decisions. The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health.

We thank Peter Sokol-Hessner for sharing his choice sets and model estimatation scripts. In , Kahneman was awarded the Nobel Prize in Economics for Prospect Theory, along with related research using the methods and theories of experimental psychology to understand economic decision-making Tversky passed away in Many of the primary implications of Prospect Theory were obtained through survey experiments.

This video will demonstrate procedures for designing the type of survey questions used in research on Prospect Theory. The first number in each bracket denotes a currency value, and the second denotes the probability associated with that outcome. On one hand, any unit of currency-like the US dollar-has an objective value, determined by the market. If a person is preparing to travel abroad and exchanging currency, it is this objective value that will dictate how many euros they can expect to receive for fifty dollars.

However, currency can also have a subjective , psychological value, which a person "assigns" to it based on many different factors, including the size of the purchase they are considering and potential relative savings. Thus, two dollars is sometimes-but not always-worth an extra mile trip. Originally formulated using survey data, Prospect Theory provides researchers with a model to predict an individual's subjective perceptions of objective monetary gains or losses. In this video, you will learn how to create survey questions to study Prospect Theory, collect and analyze participant data in the form of survey responses, and learn how these can provide insight into the psychological value people place on currency.

In this experiment, participants complete a survey with questions pertaining to gambles-theoretical events in which they could potentially lose or gain a sum of money. In questions dealing with gains, a scenario is presented where the participant has already received money-like winning five dollars in a raffle. The participant must then choose between two options as to what to do with the sum: Similarly, when a participant encounters a loss question, they must pick between options of paying a debt, or risking a greater loss for a chance to have the debt erased.

The trick here is that both options to a question have the same expected value-the average amount of money gained or lost over several trials-which takes into account the probability of a win or loss. It's the manner in which these values are presented-either as "sure things" or "risks" with a lower probability of success-which allows for an assessment of the subjective, psychological value of currency.

Participants are presented with a variety of such questions in a survey, where the probabilities of gains or loses-as well as the actual monetary amounts at stake-vary. Here, the dependent variable is the subjective value of currency, which is determined by calculating the percentage of participants that chose a particular option to a question.

Based on the previous work of Kahneman and Tversky, it is expected that participants will overestimate the subjective value of monetary losses, especially small ones, viewing them as worth more than their actual, objective values. To begin, create a survey with roughly 20 questions, and include questions dealing with diverse loss and gain scenarios. Verify that both options associated with each question demonstrate the same expected value, as well as a range of monetary values with risks associated with different probabilities.

Before distributing the survey to participants, generate a cover page to include with informed consent, which explains to participants that they do not have to complete the questions, and that their responses are anonymous. Make sure to include a signature line for participants to indicate their consent. Once the survey is finalized, distribute it to between 50 and randomly selected participants. Note that individuals can be tested in groups.

Allow them 15 min to complete the 20 questions. To analyze the data, for every question calculate the percentage of participants that chose each option-either A or B. Compare participant preferences in similar questions, such as those dealing with small sums of money either lost or won. Notice that more participants will tend to take a risk to avoid a financial loss compared to an equivalent gain, meaning that a greater subjective value is placed on monetary losses. Also notice that participants will be less likely to risk large sums in gain scenarios, indicating that their subjective value of monetary gains can decrease depending on the context.

Now that you've learned how to create surveys to study Prospect Theory, let's take a look at how experimental psychologists are using this theory to investigate aspects of decision-making behavior. As surveys that assess Prospect Theory deal with monetary losses and gains, these studies can aid our understanding of the psychological underpinnings of gambling and gambling addiction. Importantly, such work has allowed researchers to connect the high subjective value of monetary losses to the tendency to keep gambling even as debts mount.

Researchers can also pair automated variations of Prospect Theory surveys with technologies like functional MRI, which can identify "activated" brain regions. This helps scientists determine the neuroanatomical basis for how participants assign subjective values to monetary sums under different situations. Finally, Prospect Theory can also be used to develop new marketing strategies, such as stores offering perceived discounts on lower-priced items, to which consumers would assign high subjective values. By now, you should have an idea of how to design survey questions to investigate this phenomenon, collect and analyze participants' responses, and relate the Prospect Theory to human behaviors like gambling.

In addition, you should have a grasp of how the Prospect Theory relates to the subjective and objective values of currency, which are not always the same. There are several classic effects that arise in these surveys. Figure 1 illustrates one effect, sometimes known as loss aversion. People seem to place a greater subjective value on losses than on gains of equivalent value.

Figure 2 illustrates two more typical effects, associated with certainty and large numbers. Still, almost no one picks the bet, revealing a baseline preference for certain outcomes. Question 2 sets up a very similar situation, but with much smaller numbers: If a person takes a risk to win it in one place, they should do the same in another. Two gambles that demonstrate the effects of certainty and large numbers on subjective value.

Yet people overwhelmingly tend to choose A. But here, people overwhelmingly choose B. Based on hundreds of comparative gambles of this kind, in experiments spanning gains and losses, large and small numbers, and even using real as opposed to hypothetical payouts, Kahneman and Tversky developed the now famous and influential Prospect Theory curve Figure 3. The curve relates subjective value to actual value in terms of gains and losses.

Figure 4 emphasizes two main properties of the curve, rational subjective value placed on small gains—that is, small gains subjectively valued equivalently to their actual value—and an overestimation of small loses. Figure 5 emphasizes two more properties of the curve, diminishing subject value as actual value increases for already large gains or losses.