Do changes in decision weights account for effects of prior outcomes on risky decisions?

When a prior outcome in a sequence of risky decisions has been encountered, it is either integrated or segregated in the evaluation of the expected ou tcomes of a current decision. Previous research supports an integration pri nciple (the loss-sensitivity principle) stating that a prior outcome is onl y added to the expected losses. An experiment employing four groups of 16 u ndergraduates was conducted with the aim of investigating whether or not a prior outcome also influences the subjective probabilities of the expected outcomes. Although the results failed to show that ratings of subjective pr obability were affected by a prior outcome, the effect of the prior outcome on the likelihood of gambling was as expected stronger when the probabilit ies were inexact and therefore possibly more open to subjective influences. An alternative explanation was proposed which both assumes that the loss-s ensitivity principle is valid and that prior outcomes affect decision weigh ts. (C) 1999 Elsevier Science B.V. All rights reserved.