Decision-making under risk of loss in children

Sophie Steelandt, Marie-Helene Broihanne, Amelie Romain, Bernard Thierry, Valerie Dufour*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)

Abstract

In human adults, judgment errors are known to often lead to irrational decision-making in risky contexts. While these errors can affect the accuracy of profit evaluation, they may have once enhanced survival in dangerous contexts following a "better be safe than sorry" rule of thumb. Such a rule can be critical for children, and it could develop early on. Here, we investigated the rationality of choices and the possible occurrence of judgment errors in children aged 3 to 9 years when exposed to a risky trade. Children were allocated with a piece of cookie that they could either keep or risk in exchange of the content of one cup among 6, visible in front of them. In the cups, cookies could be of larger, equal or smaller sizes than the initial allocation. Chances of losing or winning were manipulated by presenting different combinations of cookie sizes in the cups (for example 3 large, 2 equal and 1 small cookie). We investigated the rationality of children's response using the theoretical models of Expected Utility Theory (EUT) and Cumulative Prospect Theory. Children aged 3 to 4 years old were unable to discriminate the profitability of exchanging in the different combinations. From 5 years, children were better at maximizing their benefit in each combination, their decisions were negatively induced by the probability of losing, and they exhibited a framing effect, a judgment error found in adults. Confronting data to the EUT indicated that children aged over 5 were risk-seekers but also revealed inconsistencies in their choices. According to a complementary model, the Cumulative Prospect Theory (CPT), they exhibited loss aversion, a pattern also found in adults. These findings confirm that adult-like judgment errors occur in children, which suggests that they possess a survival value.

Original languageEnglish
Article numbere52316
Number of pages10
JournalPLoS One
Volume8
Issue number1
DOIs
Publication statusPublished - 9 Jan 2013

Keywords

  • Probability weighting function
  • Expected value
  • Gambling task
  • Preferences
  • Gratification
  • Uncertainty
  • Psychology
  • Judgments
  • Adults
  • Gains

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