Working Papers

Attention and Loss Aversions: an eye-tracking study

Alejandro Hirmas, Jan Engelmann & Joel van der Weele

We study attentional processes underlying decision-making by directly recording visual fixation patterns that reflect attention towards specific choice options. In two experiments in which subjects choose whether to take a mixed gamble or not, we use eye-tracking to record the visual fixation patterns during decision-making that reflect moment-to-moment changes in visual attention. We assess the influence of attention on decision weights assigned to gains and losses of different magnitudes in the context of a random utility model (RUM). Importantly, we distinguish between two types of attention; average attention, reflecting behavioral goals and stable preferences, and trial-wise deviations from average attention, reflecting salient properties of gamble options on a given trial. Our results show significant relationships between both measures of attention and decision weights, indicating that both types of attention can influence choice, but do so differently. On the one hand, decision weights of gains and losses are strongly moderated by goal-based average attention, which also correlates with individual loss aversion parameters. On the other, trial-wise attentional deviations show a relationship with the saliency of gambles, which transfers to decision error proneness. These results suggest that, in the context of risky choice, attention is driven by both goal-oriented (endogenous) and saliency-related (exogenous) factors, with average attention and trial-wise deviations influencing decision-making differentially and in specific ways. While average attention reflects stable economic preferences, such as loss aversion, trial-wise attentional deviations are related to the properties of the lottery and error proneness.

Keywords: Attention, Random Parameter Models, Eye-tracking, Loss Aversion JEL Classifications: D81, D83, D87, D91

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Current Projects

Exogenous Attention & Loss Aversion

Alejandro Hirmas, Evgeny Vasilets & Jan Engelmann

We study the effect of exogenous changes in visual attention on decisions of risk. Visual attention, namely, the process of filtering and selecting to focus on specific visual stimuli, plays a relevant role in the decision-making process Orquin and Mueller-Loose (2013). In a previous study Engelmann et al. (2021), we found a strong correlation between attention to different stimuli and their importance on the decision. Moreover, our results suggested that attention is both guided by the individuals’ preferences and has a causal effect on them. In this study we test the causal effect of attention on the decision process. By using a new manipulation of attention, we find evidence that attention has a causal role on the decision process. Our results also show that the attention and its effect on the decision is different depending on the valence of the outcomes (gains or losses).

Attention & Strategies in Games

Alejandro Hirmas

To be added

Published Work

Dynamic overconfidence: a growth curve and cross lagged analysis of accuracy, confidence, overestimation and their relations (2020)

Edgar E Kausel, Francisco Carrasco, Tomás Reyes, Alejandro Hirmas, Arturo Rodríguez

Research has paid little attention to how overconfidence evolves over time. We examined how task experience (experience within a task using a sequence of items) and outcome feedback affected accuracy, confidence and overconfidence in experiments over several trials. We conducted five studies involving 614 participants and used growth curve modelling and cross-lagged analyses. Findings revealed that mere task experience (without feedback) reduced overestimation linearly. Task experience coupled with feedback reduced overconfidence quadratically; the decreasing rate was initially strong but faded away over time. The decrease in overestimation was explained due to accuracy increasing at a faster rate than confidence did. Accuracy had lagged effects on confidence; a correct estimate led to more confidence in a subsequent estimate. We also found some evidence indicating that confidence had a negative lagged influence on accuracy. This dynamic influence between accuracy and confidence is a unique finding in the overconfidence literature.

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Heinrich's pyramid and occupational safety: A statistical validation methodology (2018)

Pablo Marshall, Alejandro Hirmas, Marcos Singer

Heinrich’s pyramid, which postulates that the severity distribution of occupational accidents is relatively constant, is one of the main tools for management of occupational safety. However, existing evidence suggests that decreases in minor accidents have not always been followed by similar decreases in serious and fatal accidents. To test the statistical validity of the pyramid, we propose a Bayesian two-part model: the first part estimates accident rates using a Poisson-gamma distribution, and the second part estimates the proportion of minor, serious and fatal accidents using a Multinomial-Dirichlet distribution. If this proportion does not change when the accident rate is reduced, then the statistical validity of the pyramid is confirmed, but if it changes, then its validity is refuted. Our data cover more than 50,000 companies observed over 28 months in Chile. Heinrich’s pyramid is confirmed to be statistically invalid for different economic activity sectors and geographic regions, but the discrepancy is so small that, for practical purposes, the pyramid is valid. We thus conclude that the occurrence of minor accidents is a useful signal for assessing and forecasting the overall safety performance of a firm.

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