Integration and segregation of prior outcomes in risky decisions

Abstract

Two experiments were conducted to test if a prior outcome influences the likelihood to accept a current gamble. Undergraduate students participating as subjects imagined that they on a fictitious betting day at a horse‐race track did not gamble in the prior race, that they gambled and won, or that they gambled and lost. Subjects rated in one session the likelihood of gambling in the current race. In another session they rated how satisfied they would be with not gambling, with winning, and with losing, respectively. The results of Experiment 1 showed that as compared to no prior outcome the ratings of likelihood of gambling increased after a gain and decreased after a loss. This was explained by the assumption, supported by the ratings of satisfaction, that the prior outcome only affected the satisfaction with the expected loss of the current choice, making it less negative after a gain and more negative after a loss. These results were replicated in Experiment 2. In addition, if subjects did not know with certainty the outcome of a previous choice to gamble, the likelihood to accept the current gamble and the ratings of the satisfaction with its expected outcomes were largely unaffected.