Know the risk, take the win: How executive functions and probability processing influence advantageous decision making under risk conditions

Abstract

Recent models on decision making under risk conditions have suggested that numerical abilities are important ingredients of advantageous decision-making performance, but empirical evidence is still limited. The results of our first study show that logical reasoning and basic mental calculation capacities predict ratio processing and that ratio processing predicts decision making under risk. In the second study, logical reasoning together with executive functions predicted probability processing (numeracy and probability knowledge), and probability processing predicted decision making under risk. These findings suggest that increasing an individual’s understanding of ratios and probabilities should lead to more advantageous decisions under risk conditions.

Keywords:

• Decision making
• Numerical abilities
• Executive functions
• Mental calculation
• Ratio processing

We thank Ida Gradl, Nina Blume, and Theresa Pfanner for data collection, Elisa Wegmann and Gerrit Stöckigt for helpful comments on the manuscript, and Mirko Pawlikowski for programming the GDT–Double.