Are You Feeling Lucky? The Impact of Unexpected Wins on Our Risk-Taking Choices

A recent study by scientists at the University of Tsukuba explores how past results significantly shape our decision-making in uncertain scenarios. These researchers have put forth the “dynamic prospect theory” model, which is a fusion of the prospect theory and reinforcement learning theory. The research indicated that if humans or monkeys experienced a result that exceeded their expectations, they were likely to believe in increased odds of victory in future lotteries. This shift in behavior was linked to alterations in perceived probabilities, not in the valuation of rewards, implying that past results can irrationally influence future risk evaluations.

So, how do we humans make decisions when the results aren’t guaranteed? One approach might be to calculate the expected value of each choice by multiplying each potential outcome amount by its probability and then selecting the option with the highest expected value. While this strategy would maximize the expected payoff, it is not the typical route people take. Specifically, people appear to be irrationally swayed by the past results of their decisions when making subsequent choices.

The team at the University of Tsukuba designed and tested a model – the “dynamic prospect theory” – that merges the most widely accepted model in behavioral economics for decision-making under uncertainty, the prospect theory, and a recognized learning model from neuroscience, the reinforcement learning theory. This model described the decisions people and monkeys made when faced with risk more accurately than either the prospect theory or reinforcement learning theory alone.

In their study, they asked 70 individuals to continuously choose between two lotteries where they could potentially earn a reward with some probability. The lotteries varied in terms of the reward size, the chance of receiving it, and the level of risk involved. The results revealed that after experiencing an outcome larger than the expected value of the chosen option, participants acted as if the probability of winning the next lottery increased.

Assistant Professor Hiroshi Yamada, the study’s senior author, remarked, “This behavior is surprising because winning probabilities were explicitly conveyed to the participants (participants didn’t have to learn them from experience), and these probabilities were completely independent of previous outcomes.”

Using their dynamic prospect theory model, the researchers determined that the change in behavior was triggered by a shift in probability perception rather than a shift in reward valuation. Yamada added, “Such learning from unexpected events underpins reinforcement learning theory and is a well-known algorithm when people need to learn the rewards from experience. Interestingly, it happens even when learning is not necessary.”

Similar experiments were conducted with macaque monkeys, whose brains are very similar to human brains, and essentially the same results were obtained. The researchers were struck by the similarity between human and monkey behavior in this study.

This research’s findings suggest that studying the monkey brain will further our understanding of the neural mechanisms involved in reward and probability perception used in risk-taking decisions, as well as the happiness we experience when we succeed.

The research was detailed in the article “Dynamic prospect theory: Two core decision theories coexist in the gambling behavior of monkeys and humans” by Agnieszka Tymula, Xueting Wang, Yuri Imaizumi, Takashi Kawai, Jun Kunimatsu, Masayuki Matsumoto, and Hiroshi Yamada, published on 19 May 2023 in Science Advances. DOI: 10.1126/sciadv.ade7972

The study was supported by JSPS KAKENHI Grant Numbers JP:15H05374 and 21H02797, the Takeda Science Foundation, the Council for Addiction Behavior Studies, the Narishige Neuroscience Research Foundation, Moonshot R&D JPMJMS2294 (H.Y.), and ARC DP190100489 (A.T.).

Related links:

• University of Tsukuba’s official website or their department of psychology/neuroscience for research publications
• Science Advances’ official website to look up the mentioned study
• Websites like PubMed, JSTOR, or Google Scholar for peer-reviewed articles related to the dynamic prospect theory and decision-making under uncertainty
• Neuroscience research databases for more on reinforcement learning theory and its implications