To not settle for small losses: evidence for an ecological aspiration level of zero in dynamic decision-making.
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This work aimed to investigate how one's aspiration level is set in decision-making involving losses and how people respond when all alternatives appear to be below the aspiration level. We hypothesized that the zero point would serve as an ecological aspiration level where losses cause participants to focus on improvements in payoffs. In two experiments, we investigated these issues by combining behavioral studies and computational modeling. Participants chose from two alternatives on each trial. A decreasing option consistently gave a larger immediate payoff, although it caused future payoffs for both options to decrease. Selecting an increasing option caused payoffs for both options to increase on future trials. We manipulated the incentive structure such that in the losses condition the smallest payoff for the decreasing option was a loss, whereas in the gains condition the smallest payoff for the decreasing option was a gain, while the differences in outcomes for the two options were kept equivalent across conditions. Participants selected the increasing option more often in the losses condition than in the gains condition, regardless of whether the increasing option was objectively optimal (Experiment 1) or suboptimal (Experiment 2). Further, computational modeling results revealed that participants in the losses condition exhibited heightened weight to the frequency of positive versus negative prediction errors, suggesting that they were more attentive to improvements and reductions in outcomes than to expected values. This supports our assertion that losses induce aspiration for larger payoffs. We discuss our results in the context of recent theories of how losses shape behavior.
