Irrational behaviour arises as a consequence of emotional reactions evoked when faced with difficult decisions, according to new research at UCL (University College London), funded by the Wellcome Trust. The UCL study suggests that rational behaviour may stem from an ability to override automatic emotional responses, rather than an absence of emotion per se.
It has long been assumed in classical theories of economics that people act entirely rationally when taking decisions. However, it has increasingly become recognized that humans often act irrationally, as a consequence of biasing influences. For example, people are strongly and consistently affected by the way in which a question is presented. An operation that has 40 per cent probability of success seems more appealing than one that has a 60 per cent chance of failure.
In the study, published in the journal Science, UCL researchers used a gambling experiment to establish the cognitive basis for rational decision-making. The goal of the task was to accumulate as much money as possible, with the incentive of being paid in real money in proportion to the money won during the experiment. Participants were given a starting amount of money (50) at the beginning of each trial. They were then asked to choose between either a sure option or a gamble option (where they would have a certain chance of winning the entire amount, but also of losing it all). Subjects were presented with these choices under two different frames (i.e. scenarios), in which the sure option was worded either as the amount to be kept from the starting amount ("keep 20"), or the amount to be deducted ("lose 30"). The two options, although worded differently, would result in exactly the same outcome, i.e. that the participant would be left with 20.
The UCL study found that participants were more likely to gamble at the threat of losing 30 than the offer of keeping 20. On average, when presented with the "keep" option
Contact: Jenny Gimpel
University College London