Photo caption: When it comes down to being first or second, do your decisions become more rash to win? Photo credit: Santeri Viinamäki
Often times relative rank is what distinguishes the winners from the losers in a competition. Hence, individuals are more concerned about the relative rank rather than their absolute performance. But what effect does an individual's rank have on the choices they make?
Researchers at the University of Alberta's Department of Psychology studied whether providing feedback about an individual's rank within a group would affect their decision-making, particularly their risky choice and accuracy in a gambling scenario.
The results revealed that relative rank feedback does not affect an individuals' risky choice preference. However, researchers found that in trials where participants were provided with the risky option, their accuracy dramatically decreased.
Guaranteed vs. 50/50
"Participants were able to select with high accuracy which slot machine would provide them with the best payout when both options offered a guaranteed gain. However, when participants were provided with one guaranteed machine and one risky machine, their accuracy decreased," said Vivian Tran, a psychology student.
The researchers tested their hypotheses by manipulating the rank feedback participants received once they completed the experiment half way. Participants in the experimental group received feedback on their performance. The feedback provided indicated whether their performance was above or below group average.
The participants were presented with the choice of selecting one of two slot machines on a computer test. In total there were four slot machines that were presented to the participants. Three of the slot machines always led to guaranteed outcomes (20, 40, or 60 points), and the fourth, risky slot machine led to a 50/50 chance of 0 or 80 points.
Instead of group average affecting their performance however, it was the option of a risky choice that changed their decisions. "This study shows that when choices involve risk, individuals have a more difficult time identifying the objectively better option," said Tran. Despite being given a guaranteed and set win, participants opted towards the appeal of a risky option which had the chance of winning more rather than the safe option. When it comes to rank or risk, risk was the favoured option.