טכניון מכון טכנולוגי לישראל
הטכניון מכון טכנולוגי לישראל - בית הספר ללימודי מוסמכים  
Ph.D Thesis
Ph.D StudentHochman Guy
SubjectThe Role of Losses in Decision Making Processes: The
Interplay between Physiological and Behavioral
Measures
DepartmentDepartment of Industrial Engineering and Management
Supervisor Professor Eldad Yechiam
Full Thesis textFull thesis text - English Version


Abstract

Losses are a fact of life. However, the role they play in decision-making processes remains unclear. In the past two decades, it has been argued that "bad is stronger than good", suggesting that negative experiences (e.g., losses) have a greater influence on individuals than positive experiences (e.g., gains). For example, according to Prospect theory, people are more sensitive to the possibility of losing than they are to the possibility of gaining. Similarly, autonomic arousal has been found to be affected more by negative outcomes than by positive ones. In contrast, recent evidence suggests that this tendency is not exhibited in classic laboratory decision- making paradigms, which implies that behaviorally, people do not exhibit higher sensitivity to negative outcomes. In the current dissertation, I aimed to disentangle this apparent contradiction, as well as bridge the gap between physiological and behavioral responses to losses, and to explore the unique role that losses play in decision processes. In the first set of experiments, I compared physiological and behavioral responses to losses. The results showed that losses lead to increased autonomic responses compared to equivalent gains (as indicated by pupil dilation and heart rate), despite the lack of behavioral loss aversion. This pattern of results supports the hypothesis that losses signal a potential threat in the environment, and thus increase the perceived risk associated with decisions involving losses. As a result, potential losses not only inflate the subjective significance of the loss but also the gains associated with this decision. In the second set of experiments, I used Event-related potentials to examine brain processes associated with the observed dissociation between physiological and behavioral responses to losses vs. gains. The results showed an increased P300 waveform in response to losses in prefrontal cortical regions, suggesting that the dissociation between the increased physiological response and behavioral responses to losses results form an inhibitory mechanism of behavioral responses. In the third and final set of experiments, I measured outcome satisfaction and showed, corroborating the global effect model, that losses increase the subjective evaluation of both gains and losses associated with the alternative producing losses. This pattern of results portrays the Autonomic Nervous System as a “general alerter” in reasoning processes, which may be triggered even by minute monetary losses. In addition, these results suggest boundary conditions for effect-based decision models, and might highlight an important difference between affective and cognitive evaluations of risk level.