The willingness to take losses for larger gains depends on whether one has been primed to think about mating and also one's sex.
TEMPE, Ariz. – Could a passing mood influence your financial portfolio for decades to come? Can impulses you inherited from your cave-man ancestors influence your financial decisions in the modern world in ways that may have lifelong consequences?
In a word, yes.
Arizona State University researchers report new evidence that passing mood and deeply embedded human impulses can and do influence us as we make important financial decisions. The new findings, just released online by the American Psychological Association, suggest that our economic decisions change radically when either survival or reproduction is on our minds.
The old view of economic decision-making focuses on human beings as acting rational. In the last few years, cognitive psychologists have revolutionized economics by demonstrating that economic decisions are often irrational. One of the best-known examples of such irrationalities is the phenomenon of "loss aversion."
To a rational economist, $100 is worth exactly $100, whether it's in your pocket now or on the gambling table. But dozens of studies have demonstrated that the typical person places about twice as much psychological value on keeping the $100 bill in their wallet as they do when they place it on winning another $100.
From an evolutionary perspective the effects on men and women make sense. Though today we aren't in the environment for which we are evolutionarily adapted and as a result we are making decisions that are less than optional.
New research re-examines economic decisions in an evolutionary light and suggests that our decision biases may not be so irrational at all. In a series of three studies to appear in the March 2012 issue of the Journal of Personality and Social Psychology, a team of Arizona State University psychologists shows that loss aversion waxes and wanes in flexible ways, depending of whether or not the person is experiencing different fundamental motivational states, such as self-protection or looking for a mate.
Men in a mating frame of mind become less loss-averse while getting into a mating frame of mind has the opposite effect on women. This makes sense from an evolutionary perspective.
In the first study, research participants were asked how happy or unhappy it would make them to gain or lose $100, or to experience a 30-percentile boost in their financial assets. As in previous research, losses typically loomed slightly larger than gains. But all that changed for participants who answered the questions in a mating frame of mind (after imagining themselves having a romantic encounter with someone they found highly attractive).
According to Li, the first author of the study: "For men in a mating frame of mind, loss aversion completely disappeared and they became more focused on wins than losses. For women, on the other hand, mating motivation led them to be even more loss averse, to focus less on possible gains and even more on the pain of loss.
From an evolutionary perspective this makes sense because reproductive decisions are inherently much more costly for females, who pay higher costs of pregnancy and nursing.
So we've got innate differences hard wired into our brains. Whether the male or female tendency is adaptive depends on the situation.
I see all the tendencies of humans to react to their environments in ways that cut into our ability to think rationally as opportunities to better manage oneself. Set up cues and avoidance of cues on your subconscious to shape your biases in more adaptive directions.
|Share |||Randall Parker, 2011 October 24 06:51 AM Brain Sex Differences|