Graphs versus numbers: How information format affects risk aversion in gambling

In lottery gambling, the common phenomenon of risk aversion shows up a s preference of the option with the higher win probability, even if a riskier alternative offers a greater expected value . Because riskier choices would optimize profitability in such cases, the present study investigates the visual format, with which lotteries are conveyed, as potential instrument to modulate risk attitudes. Previous research has shown that enhanced atte ntion to graphical compared to numerical probabilities can increase risk aversion, but evidence for the reverse effect — r educed risk aversion through a graphical display of outcomes — is sparse. We conducted three experiments, in which participants repea tedly selected one of two lotteries. Probabilities and outcomes were either presented numerically or in a graphical format tha t consisted of pie charts (Experiment 1) or icon arrays (Experiment 2 and 3). Further, expected values were either higher in th e safer or in the riskier lottery, or they did not differ between the options. Despite a marked risk aversion in all experiments, ou r results show that presenting outcomes as graphs can reduce — albeit not eliminate — risk aversion (Experiment 3). Yet, no t all formats prove suitable, and non-intuitive outcome graphs can even enhance risk aversion (Experiment 1). Jo int analyses of choice proportions and response times (RTs) further uncovered that risk aversion leads to safe choices par ticularly in fast decisions. This pattern is expressed under graphical probabilities, whereas graphical outcomes can weaken the r apid dominance of risk aversion and the variability over RTs (Experiment 1 and 2). Together, our findings demonstrate the rele vance of information format for risky decisions. Keywords: lottery gambling; information format; risk aversion; condition al choice functions (CCFs)