C&B Notes

How Previous Expectations Shape Future Decisions

A new study by a Case Western Reserve psychologist indicates that the larger the gap is between a person’s expectations for an event and the actual outcome — even when the outcome is better — the more conservative future decisions become.  This seems to be a very healthy reaction: a bias for process over result.  Unfortunately, it is not clear if this bias is a temporary phenomenon and not a persisting change in behavior.

According to new research from psychologist Heath Demaree, of Case Western Reserve University in Cleveland, Ohio, people who’ve experienced surprising outcomes in various situations — whether those outcomes were good or bad — are less likely to take risks in the future.  In other words, it’s not whether you win or lose, but whether the outcome is expected.  People appear to decrease their risk-taking levels after experiencing any surprising outcome — even positive ones.

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The researchers had 59 participants play the high-risk computerized gambling game (13 percent) and surprised the participants with some big wins.  A separate group of 85 participants played both the 50 percent and 85 percent win yield.  The last group, which expected to mostly win, was given some unexpected losses.  After playing each game, students answered a questionnaire about emotions, moods and risk-taking.  The results found that experiencing a surprising event, such as winning or losing unexpectedly, appeared to temporarily produce risk aversion.