The persistence of common-ratio effects in multiple-play decisions

• Published in: Judgment and Decision Making Vol. 11; no. 4; pp. 361 - 379
• Main Authors: DeKay, Michael L., Schley, Dan R., Miller, Seth A., Erford, Breann M., Sun, Jonghun, Karim, Michael N., Lanyon, Mandy B.
• Format: Journal Article
• Language: English
• Published: Tallahassee Society for Judgment and Decision Making 01.07.2016; Society for Judgment & Decision Making; Cambridge University Press
• Subjects: Analysis; certainty effect; common-ratio effect; Decision making; Expected utility; Methods; multiple play; possibility effect; Rationality; repeated play.NAKeywords; reverse common-ratio effect; Studies; United States; common-ratio effect; multiple play; repeated play; certainty effect; possibility effect; reverse common-ratio effect
• DOI: 10.1017/S193029750000379X
• ISSN: 1930-2975

Abstract People often make more rational choices between monetary prospects when their choices will be played out many times rather than just once. For example, previous research has shown that the certainty effect and the possibility effect (two common-ratio effects that violate expected utility theory) are eliminated in multiple-play decisions. This finding is challenged by seven new studies ( N = 2391) and two small meta-analyses. Results indicate that, on average, certainty and possibility effects are reduced but not eliminated in multiple-play decisions. Moreover, in our within-participants studies, the certainty and possibility choice patterns almost always remained the modal or majority patterns. Our primary results were not reliably affected by prompts that encouraged a long-run perspective, by participants’ insight into long-run payoffs, or by participants’ numeracy. The persistence of common-ratio effects suggests that the oft-cited benefits of multiple plays for the rationality of decision makers’ choices may be smaller than previously realized.