Numerate decision makers don’t use more effortful strategies unless it pays: A process tracing investigation of skilled and adaptive strategy selection in risky decision making

Abstract

The present study investigated skilled and adaptive strategy selection in risky decision making. We proposed that people with high objective numeracy, a strong predictor of general decision making skill, would have a broad repertoire of choice strategies and adaptively select these strategies depending on the importance of the decision. Thus more objectively numerate people would maximize their effort (e.g., invest more time) in important, high-payoff decisions and switch to a simple, fast heuristic strategy in trivial decisions. Subjective numeracy would, by contrast, be more closely related to interest in problem solving for its own sake and would not yield such an effect of importance. Participants made twelve high-payoff choices and twelve low-payoff choices in binary two-outcome gambles framed as gains. We measured objective and subjective numeracy using standard measures. Results showed that people with high subjective numeracy generally maximized the expected value (EV) in all decisions. In contrast, participants with high objective numeracy maximized EV only when choice problems were meaningful (i.e., they could result in high payoffs). When choice problems were trivial (i.e., choosing the normatively better option would not result in a large payoff), more objectively numerate participants made choices consistent with faster, more frugal heuristic strategies.

Keywords

• numeracy
• strategy selection
• risky choice
• prospect theory
• priority heuristic
• skilled decision making
• deliberation