Individual differences & instance based decision making: putting “bounded rationality” to the test

Abstract

Instance based risk taking behaviour allows relatively little time for information processing and may be responsible for unconsciously driven erratic behaviour in judgment and decision making. Previous theories that have explored the factors involved in risk taking behaviour include dispositional, decision-making, and neurocognitive functioning based theories. The present studies examine the contributions of age and gender, emotional intelligence, dispositional traits and affective states, involved in instance based decision-making. Participants were assessed using a binary choice task (study 1-A) and a double gamble risk taking task (study 1-B) which involved choices between financial gains with different pay-offs and risk levels, and an ignorance based task (study 2) which involved ignorance based judgments in the classic city size task. Participants were also administered the Trait Emotional Intelligence questionnaire, the Positive Affect Negative Affect Schedule, a self-report measure based on Gray’s behavioural activation and behavioural inhibition systems theory (BIS/BAS scale), and Dickman’s Impulsivity Inventory which distinguishes in functional and dysfunctional impulsivity. The purpose of these studies was to investigate whether individual differences in personality, emotional intelligence (EI) and affect predicted instance based risk taking behaviour. The participants were 64 (study 1-A), 68 (study 1-B), and 73 (study 2) university students; In study 1-A there were significant correlations between positive affect (PA), BAS Drive, BAS Fun-Seeking (FS), and total BAS and the number of risky choices in the binary choice task (r = .28, .25, .26, .31; p= .02, .04, .04, .01). In study 1-B there were significant correlations between PA, FS and total BAS and the number of risky choices in the binary choice double gamble task (r = .24, .25, .32; p = .04, .04, .01). There were no significant associations of trait EI or (functional or dysfunctional) impulsivity with the number of risky choices. These results indicate that individuals who are high in PA, BAS Drive and BAS Fun-Seeking tend to be riskier in decision making involving monetary incentives on an instance based decision making task. In study 2 there were significant correlations between functional impulsivity and negative affect and absolute scores of the Discrimination Index (r = .26, 33; p = .02, .01). These results indicate that individuals who are high in FI and NA tend to base their judgments and decision making on recognition heuristic use. The findings of the three studies indicate that dispositional variables and affective states may play a very important role in instance based risk taking behaviour. Also they indicate that affect is an important factor in instance based decision making, but the role of impulsivity is less clear. The findings in general imply a connection between personality and affective states and performance in professional risk laden domains such as the security, finances, and insurance sectors where individuals are called to take split second decisions.