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{
    "pk": 29353,
    "title": "Prospect Theory and Optimal Risky Choices with Goals",
    "subtitle": null,
    "abstract": "Decision making under risk is often studied as a preferential\nchoice governed by stable individual personality\ncharacteristics, but risky choice can also be viewed as a\ndynamic problem of resource accumulation to survive. When\ndecision makers aim to reach a particular goal in limited time,\nsuch as “earn at least $100 in five choices,” risky choice\nbecomes a non-trivial planning problem. This problem has an\noptimal solution that can differ from immediate expected-value\nmaximization. We studied the optimality of risky choices under\nsuch minimum goal requirements experimentally and find that\nthe observed choices under goals approximate the optimal\nsolution. However, because the optimal model is very complex,\nwe examine if simpler models can predict people’s choices\nbetter. We test an extended version of prospect theory,\nassuming a dynamic reference point that depends on the\ndistance to the goal. This “dynamic prospect theory” was better\nthan the alternative model in describing people’s decisions\n(i.e., for 63% of the participants, it was the best model). Our\nfindings show that humans can excel in a highly complex,\ndynamic, risky choice problem and that a dynamic version of\nprospect theory provides one possible explanation for how\npeople decide under risk when long-term goals matter.",
    "language": "eng",
    "license": {
        "name": "",
        "short_name": "",
        "text": null,
        "url": ""
    },
    "keywords": [
        {
            "word": "risky choice; energy budget rule; risk sensitivity;\ngoals; choice modeling"
        }
    ],
    "section": "Choices and Decisions",
    "is_remote": true,
    "remote_url": "https://escholarship.org/uc/item/6845g1g5",
    "frozenauthors": [
        {
            "first_name": "Jana",
            "middle_name": "B.",
            "last_name": "Jarecki",
            "name_suffix": "",
            "institution": "University of Basel",
            "department": ""
        },
        {
            "first_name": "Jörg",
            "middle_name": "",
            "last_name": "Rieskamp",
            "name_suffix": "",
            "institution": "University of Basel",
            "department": ""
        }
    ],
    "date_submitted": null,
    "date_accepted": null,
    "date_published": "2020-01-01T18:00:00Z",
    "render_galley": null,
    "galleys": [
        {
            "label": "PDF",
            "type": "pdf",
            "path": "https://journalpub.escholarship.org/cognitivesciencesociety/article/29353/galley/19214/download/"
        }
    ]
}