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Economic Decision Biases and Fundamental Motivations: How Mating and Self-Protection Alter Loss Aversion

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Economic Decision Biases and Fundamental Motivations: How Mating and Self-Protection Alter Loss Aversion Journal of Personality and Social Psychology © 2011 American Psychological Association 2012, Vol. 102, No. 3, 550–561 0022-3514/12/$12.00 DOI: 10.1037/a0025844 Economic Decision Biases and Fundamental Motivations: How Mating and Self-Protection Alter Loss Aversion Yexin Jessica Li and Douglas T. Kenrick Vladas Griskevicius Arizona State University University of Minnesota Steven L. Neuberg Arizona State University Much research shows that people are loss averse, meaning that they weigh losses more heavily than gains. Drawing on an evolutionary perspective, we propose that although loss aversion might have been adaptive for solving challenges in the domain of self-protection, this may not be true for men in the domain of mating. Three experiments examine how loss aversion is influenced by mating and self- protection motives. Findings reveal that mating motives selectively erased loss aversion in men. In contrast, self-protective motives led both men and women to become more loss averse. Overall, loss aversion appears to be sensitive to evolutionarily important motives, suggesting that it may be a domain-specific bias operating according to an adaptive logic of recurring threats and opportunities in different evolutionary domains. Keywords: evolutionary psychology, mating, self-protection, decision biases, loss aversion Research at the interface of experimental psychology and eco- are likely to be recurring contexts in which people systematically nomics has demonstrated that psychological factors often lead to weigh gains more than losses. We propose that loss aversion is a seeming irrationalities and limitations in judgment and decision- cognitive bias that would have been well suited to solving certain making processes. Challenging the classical model of rational recurring challenges related to survival, specifically, protecting man, which depicts people as well-informed decision makers, oneself from physical danger. However, loss aversion may not behavioral economists have incorporated the insights of cognitive have been as well suited to solving problems of attracting a and social psychology, demonstrating people’s tendencies to use romantic partner. Thus, we examine experimentally how self- simplistic and sometimes irrational biases (for a review see Bett- protection and mating motivations influence the relative valuation man, Luce, & Payne, 2008). A classic example is a well-known of gains and losses. We predict that loss aversion will be exacer- phenomenon called loss aversion, which is the tendency for people bated in some contexts but may be erased—or even reversed—in to weigh losses more strongly than objectively equivalent gains others. (Kahneman & Tversky, 1979; Tversky & Kahneman, 1991). To a rational economic mind, $100 is worth exactly $100, yet people Loss Aversion in Evolutionary Context are more psychologically moved by a loss of $100 than by a gain of an identical amount (Kahneman & Tversky, 1979). Loss aver- Classic economic models of behavior presumed that individuals sion is considered so widespread that a recent review asserts, make decisions by conducting cost–benefit analyses, subject to “There has been so much research on loss aversion that we can say budget constraints. Psychological researchers have demonstrated with some certainty that people are impacted twice as much by that such decisions are often influenced by systematic biases (e.g., losses as they are by gains” (Vohs & Luce, 2010, p. 736). Kahneman & Tversky, 1979; Tversky & Kahneman, 1991). Re- In the research we report, we consider loss aversion through a search on financial decision making links the field of economics functional evolutionary lens. Our analysis suggests that loss aver- not only with cognitive psychology but also with anthropology and sion may not be a domain-general bias. Instead, we argue that there evolutionary biology (e.g., Winterhalder, 2007). Economically based models have also been influential in the field of social psychology (e.g., Van Vugt & Van Lange, 2006). This article was published Online First October 17, 2011. Evolutionary approaches to behavior are inherently economic in Yexin Jessica Li, Douglas T. Kenrick, and Steven L. Neuberg, Depart- nature, focusing on the allocation of intrinsically limited resources ment of Psychology, Arizona State University; Vladas Griskevicius, Carl- across various fitness-relevant activities. Whereas a traditional son School of Management, University of Minnesota. economic perspective has presumed a common currency for dif- This research was supported by National Science Foundation Grant 0642873 to Douglas T. Kenrick, Steven L. Neuberg, and Vladas Griskevi- ferent types of judgments (general “utility”), an evolutionary per- cius. spective assumes that the human brain contains not one domain- Correspondence concerning this article should be addressed to Douglas general decision-making device but rather a number of different T. Kenrick, Department of Psychology, Arizona State University, Tempe, decision systems, each operating according to somewhat different AZ 85287-1104. E-mail: [email protected] rules (Kenrick, Griskevicius, Neuberg, & Schaller, 2010). From 550 EVOLUTION AND LOSS AVERSION 551 this perspective, which motivational/emotional system governs a averse with regard to most types of resources in most types of given decision systematically varies depending on relevant fea- contexts. Such perspectives presume that while there may be tures of the current environment and individual differences (linked individual differences in loss aversion, these individual differences to factors such as the person’s sex, mating strategy, and develop- should be fairly stable across contexts (Gachter, Johnson, & Herr- mental ecology). mann, 2007; but see Harinck, Van Dijk, Van Beest, & Mersmann, When it comes to loss aversion, a significant amount of research 2007). has shown that it is a relatively commonplace and robust finding: In contrast, an evolutionary perspective posits that the human Time and again, studies reveal that a loss of resources has more brain does not contain one domain-general decision-making de- psychological impact than a gain of equivalent magnitude (e.g., vice. Instead, the brain is believed to comprise a number of Ariely, Huber, & Wertenbroch, 2005; Camerer, 2005; Novemsky functionally modular, “domain-specific” decision systems, each & Kahneman, 2005; Zhang & Fishbach, 2005). The notion that employing somewhat different information as input and operating losses loom larger than gains has had important ramifications for according to somewhat different decision rules adapted for solving the study of many decision biases. For example, loss aversion is problems in that domain (Barrett & Kurzban, 2006; Cosmides & often used to help explain widespread risk aversion (e.g., Kahne- Tooby, 1992). For example, birds use different memory systems man & Lovallo, 1993). Loss aversion is also routinely invoked to and different rules to remember species song, tastes of poisonous explain the endowment effect (Thaler, 1980), which refers to the food, and locations of food caches (Sherry & Schacter, 1987). tendency for people to value an object more highly when it is in Many birds learn their species song during an early critical period their possession than they would value the same object if they did and then reproduce it perfectly during the next breeding season not already possess it. In addition, loss aversion is used to help without ever having practiced it. On the other hand, birds learn the explain many other phenomena, such as the sunk cost fallacy, the characteristics of poisonous foods in a single trial during any time attraction effect, the compromise effect, anticipated and experi- of life. Following still different rules, food locations are learned, enced regret, and the status quo bias (Rick, in press). updated, and erased on a daily basis. Using the same decision rules It seems that people, whether in traditional societies or in for each of these problems would be highly inefficient, and dif- modern market economies, are cognitively biased to ensure that ferent memory systems in birds are anatomically distinct. they do not lose what they already have. Although it may seem Likewise, much research demonstrates that humans have differ- peculiar that $100 is not always psychologically worth $100, a ent domain-specific systems for dealing with certain categories of consideration of the environment in which humans evolved makes adaptive problems. For example, people learn very quickly to the loss aversion bias seem less perplexing and more rational. avoid foods that make them sick; unlike other learning systems, Indeed, given the universal nature of loss aversion, this tendency is food aversion requires only one trial and is difficult to extinguish believed to be rooted in evolved psychological mechanisms (Chen, (Rozin & Kalat, 1971). Other systems have evolved to deal with Lakshminaryanan, & Santos, 2006). There is good reason to be- other, sometimes conceptually incompatible tasks, such as learning lieve our ancestors often operated close to the margin, with a a new language, spatial location, and recognizing and remember- serious danger that they, or their children, might not survive if they ing other people’s faces (e.g., Barrett & Kurzban, 2006; Domjan, misjudged how to invest their time and effort (Stephens & Krebs, 2005; Klein, Cosmides, Tooby, & Chance, 2002; Sherry & 1986). Throughout most of human history, resource losses could Schacter, 1987). For example,
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