Similar to research on risky choice, the traditional analysis of intertemporal choice takes the view that an individual behaves so as to maximize the discounted sum of all future utilities. The well-known Allais paradox contradicts the fundamental postulates of maximizing the expected value or utility of a risky option. We describe a violation of the law of diminishing marginal utility as well as an intertemporal version of the Allais paradox.

The current field study compares the time preferences of young adults of similar ages but in two very different environments, one more dangerous and uncertain than the other. Soldiers, college students and a control group of teenagers answered questionnaires about their time preferences. During mandatory service, soldiers live in a violent atmosphere where they face great uncertainty about the near future and high risk of mortality (measured by probability of survival). University students and teenagers live in much calmer environment and are tested for performance only periodically. The soldier-subjects show relatively high subjective discount rates when compared to the other two groups. We suggest that the higher subjective discount rate among soldiers can be the result of high perceived risk in the army as an institution, or higher mortality risk.

People must often perform calculations in order to produce a numeric estimate (e.g., a grocery-store shopper estimating the total price of his or her shopping cart contents). The current studies were designed to test whether estimates based on calculations are influenced by comparisons with irrelevant anchors. Previous research has demonstrated that estimates across a wide range of contexts assimilate toward anchors, but none has examined estimates based on calculations. In two studies, we had participants compare the answers to math problems with anchors. In both studies, participants’ estimates assimilated toward the anchor values. This effect was moderated by time limit such that the anchoring effects were larger when the participants’ ability to engage in calculations was limited by a restrictive time limit.

Individuals are generally reluctant to trade goods—a phenomenon identified as the endowment effect. This paper focuses on consumers’ puzzling reluctance to exchange gambles, and in particular lottery tickets with identical distribution (i.e., same odds of winning), and identifies the ticket’s vividness as an important moderator. Three studies demonstrate that individuals are more willing to exchange less vivid lottery tickets (e.g., tickets concealed in envelopes, or tickets with an unknown number) compared to more vivid tickets (e.g., tickets not concealed in envelopes, or tickets with a known number) when offered an incentive to exchange. Moreover, this effect is mediated by anticipated regret, such that less regret is anticipated when exchanging less vivid tickets, thus increasing individuals’ willingness to exchange tickets.

Using Kahneman and Tversky’s life-death decision paradigm, Wang and colleagues (e.g., Wang & Johnston, 1995; Wang, 1996a, 1996b, 1996c, 2008; Wang et al., 2001) have shown two characteristic phenomena regarding people’s attitude to risk when the contextual group size is manipulated. In both positive and negative frames, people tend to take greater risks in life-death decisions as the contextual group size becomes smaller; this risk-seeking attitude is greater when framed positively than negatively. (This second characteristic often leads to the disappearance of the framing effect in small group contexts comprising of 6 or 60 people.) Their results could shed new light on the effect of contextual group size on people’s risk choice. However these results are usually observed in laboratory experiments with university student samples. This study aims to examine the external validity of these results through different ways of experimentation and with a different sample base. The first characteristic was replicated in both a face-to-face interview with a randomly selected sample of the Japanese general public, and a web-based experiment with a non-student sample, but not the second.

Indecisiveness is an individual difference measure of chronic difficulty and delay in decision making. Indecisiveness is associated with low decisional confidence and distinct patterns of pre-choice information search behavior. The present study explored whether the confidence levels and search behaviors associated with individual indecisiveness also emerge in group decision making contexts. In this study, 97 decisive and indecisive participants were assigned to make a decision individually or in a homogenous three-person group. Indecisiveness score was found to predict participant decisional confidence in the individual condition but not in the group condition, with group participants being overall more confident than individuals. Similar results were obtained for other related measures of participants’ perceptions of the decision task. Surprisingly, no indecisiveness-related differences in information search were found, suggesting that other aspects of the group process contribute to increased confidence. The results provide initial evidence that indecisiveness does not influence group decision making and that, especially for indecisive individuals, working in groups may be a way to boost decisional confidence.

The article shows that when people consider differentiated goods or services that differ in price and quality, they exhibit a decision-making bias of “relative thinking”: relative price differences affect them even when economic theory suggests that only absolute price differences matter. This result is obtained in four different consumption categories. Sometimes subjects are affected only by relative price differences (“full relative thinking”) and sometimes also by absolute price differences (“partial relative thinking”). This behavior has implications for various disciplines, and it is particularly relevant in models dealing with horizontal or vertical differentiation, optimal pricing, competitive strategy, or advertising.