Journal of Behavioral Decision Making

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Volume 32 Issue 3 (July 2019), Pages 229-372

Good fortune but bad luck? Predictable versus unpredictable gains and losses in risky choice (pages 359-372)

Abstract This study examines the effects of two different types of good and bad experiences on risk‐taking preferences: fortune and luck. We define fortune as a relatively stable positive or negative context within which choices are made and luck as a more unpredictable series of better or worse outcomes. With the use of a lottery‐based paradigm, fortune was operationalized as a preponderance of all‐gain or all‐loss two‐outcome option pairs within a larger set of mixed‐outcome control lotteries. Luck was operationalized as the experienced frequency of better versus worse outcomes when playing the lotteries. We predicted that fortune and luck would lead to opposite risk‐taking tendencies within control lotteries. An assimilation effect of fortune was predicted, with risk‐averse preferences for control lotteries when surrounded by good fortune and risk‐seeking preferences when surrounded by bad fortune. In contrast, we expected that high rates of success with good luck would lead to risk‐seeking preferences, whereas low rates of success with bad luck would yield risk‐averse preferences. Our predictions for fortune were confirmed; however, there was no evidence of any effect on risk taking based on experiencing good versus bad luck. Moreover, we observed a striking disconnect between impressions of the experience and risk‐taking behavior. Both identification and attributions of luck and fortune were highly correlated with the number of gain outcomes that participants experienced but were uncorrelated with risk taking. We review these surprising findings considering several prominent theories of risk‐taking behavior, particularly drawing attention to the differential roles of predecisional and postdecisional information in choice.

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