Decisions Under Risk and Ambiguity
Decision theorists typically investigate decisions under uncertainty by observing preferences among chance gambles. Of course most real-world decisions involve some vagueness or ambiguity concerning probabilities of possible outcomes. Our longest-standing research stream investigates how our experiences, beliefs, and preferences influence our willingness to act under naturalistic uncertainty.
Hadar, L., Sood, S., & Fox, C. R. (2013). Journal of Marketing Research, 50(3), 303-316.
An important component of most decisions under uncertainty is our assessment of the relative and absolute likelihood of critical events on which outcomes depend. For instance, whether or not one carries an umbrella depends on one’s assessment of the likelihood of rain. Much of our research develops and tests models of how various experts and amateurs form these beliefs under uncertainty.
Judgment extremity and accuracy under epistemic vs. aleatory uncertainty.
Tannenbaum, D., Fox, C.R., & Ülkümen, G. (2017). Management Science, 63, 497-518.
Variants of Uncertainty
Most accounts of probability treat uncertainty as a unitary construct--either as a subjective degree of belief that an event will occur (as with the Bayesian school) or as a measure of expected long-run relative frequency of various outcomes of an experiment (as with the Frequentistic school). One of our newest research streams demonstrates that we all carry intuitions about uncertainty along both dimensions, sometimes focusing on missing information or expertise (knowable or epistemic uncertainty) and sometimes focusing on propensities of classes of events to occur (random or aleatory uncertainty). These distinctions influence the language we use to communicate, the calibration of our judgments, how we invest, and support for social redistribution policies.
Ülkümen, G., Fox, C.R., & Malle, B.F. (2016). Journal of Experimental Psychology: General, 145, 1280-1297.
Many judgments and choices entail allocating a limited resource (e.g., money, choices, probabilistic beliefs) over a fixed set of options (e.g., available investments, menu items, events that might occur). When doing so we are often biased toward equal allocation over all available options. As a result, allocations systematically differ with the way in which the set of options is grouped or partitioned. For instance, consumers tend to save more when allocating their income to one checking account and three savings accounts than when allocating to one checking account and one savings account.
How subjective grouping of options influences choice and allocation: diversification bias and the phenomenon of partition dependence.
Fox, C. R., Ratner, R. K., & Lieb, D. S. (2005). Journal of Experimental Psychology: General, 134(4), 538.
Choice Architecture and Behavioral Policy
Much of our recent work is focused on translating behavioral insights from the lab to applications in the field. Some of this work involves developing and testing new tools of choice architecture or new insights concerning the effectiveness and acceptability of their application. Some of this work involves working with policy makers and practitioners to promote rigorous application of behavioral science in ways that serve the public interest, especially through our work with the Behavioral Science & Policy Association.
Tannenbaum, D., Fox, C. R., & Rogers, T. (2017). Nature Human Behaviour, 1, 1-7.
Public health is critically influenced by decisions of health care providers such as whether to prescribe opioids, whether to order a particular test, or whether to recommend an operation. These decisions are typically made in a controlled clinical environment and facilitated by electronic decision support. In an exciting new research stream we have been working with health researchers to develop and test modifications in choice architecture that “nudge” health providers and patients to make decisions that promote best practices without infringing on their freedom of choice.
Meeker, D., Linder, J. A., Fox, C. R., Friedberg, M. W., Persell, S. D., Goldstein, N. J., ... & Doctor, J. N. (2016). Jama, 315(6), 562-570.
Financial Decision Making
Much of our work on risk and uncertainty has been relevant to financial decision making. In addition we have recently begun to explore saving, debt, and time preferences. Our hope is that this work can be used to help consumers make better financial decisions and help professionals in the financial services industry provide better advice to their clients.
We are involved in a number of additional research topics, including: political polarization, distributional preferences, intertemporal choice, financial decision making, and strategic decision making