I combine theory and methodology from economics, psychology, and neuroscience to understand how people decide, why they make wrong decisions, and how to make them better choosers. My research focused on how economic preferences change over the lifespan and contexts, including how thirst, being observed, outdoor luminance, as well as the structure of current and past choice affect behavior.
I have been awarded over $33 million in grants as a Chief Investigator, including ARC Centre of Excellence, DECRA, Discovery, and Linkage grants. In 2017 I received the Award from the Society for Neuroeconomics for my contributions to our understanding of decision-making.
Published papers
Guo J. and Tymula A. (2021) Waterfall illusion in risky choice, European Economic Review, 139
Tymula A. and Wang X. (2021) Increased risk-taking, not loss tolerance, drives adolescents’ propensity to gamble more under peer observation, [supplement], the Journal of Economic Behaviour and Organization, 188:439-457
Weinrabe A., Chung H., Tymula A., Tranand J., Hickie I. (2020) Economic Rationality in Young People with Emerging Mood Disorder, Journal of Neuroscience, Economics, and Psychology
Tymula (2019) Adolescents are more impatient and inconsistent, not more risk-taking when observed by peers – a comprehensive study of adolescent behavior under peer observation, Journal of Economic Behavior and Organisation, 166:735-750
Chung, H., Glimcher. P.W., Tymula, A. (2019) An Experimental Comparison of Risky and Riskless Choice – Limitations of Prospect Theory and Expected Utility Theory, American Economic Journal: Micro, 11(3):34-67
Rosato A. and Tymula A. (2019) Loss Aversion and Competition in Vickrey Auctions: Money Ain’t No Good, Games and Economic Behavior, 115: 188-208
Published book chapters
Tymula A. (2019). Brain Morphometry for Economists: How do Brain Volume Constraints Affect Our Choices? in Biophysical Measurement in Experimental Social Science Research, Foster (Eds.), ELSEVIER
Other writing
Tymula A. (2016) Financial gamble? My brain made me do it. The Conversation
- featured on Scientific American Blog Network
- written for the Young Minds of the 2014 USA Science and Engineering Festival
Tymula A. (2014) Explainer: neuroeconomics, where science and economics meet. The Conversation
Book review of After Phrenology: Neural Reuse and the Interactive Brain, Michael L. Anderson. The MIT Press, Cambridge, MA, USA (2014) in Journal of Economic Psychology, Volume 51, December 2015, p. 279–280
Papers under review
We present a descriptive model of choice with normative foundations based on how the brain is thought to represent value. An individual’s behavior is fully described by two primitives: an individual’s expectation and one free parameter we call “predisposition’. The model captures the same apparent preference phenomena illustrated by Prospect Theory but unlike Prospect Theory accounts for individual heterogeneity in parameters, employs far fewer parameters than full prospect theory, and retains neurobiological plausibility as a causal model of the choice process. Additionally, our theory makes a series of novel predictions amenable to future testing and includes an alternative explanation for endowment effect.
Cheung S. L., Tymula A., Wang X. (2020) Present Bias for Monetary and Dietary Rewards: Evidence from Chinese Teenagers, revision requested from Experimental Economics
Economists model self-control problems through time-inconsistent preferences. Empirical tests of these preferences largely rely on experimental elicitation methods using monetary rewards, with several recent studies failing to find present bias for money. In this paper, we compare estimates of present bias for money with estimates for healthy and unhealthy foods. In a within-subjects longitudinal experiment with 697 low-income Chinese high school students we find strong present bias for both money and food, and that individual measures of present bias are moderately correlated across reward types. Our experimental measures of time preferences over money predict field behaviours better than preferences elicited over foods.
Cheung S., Tymula A., Wang X. (2021) Quasi-hyperbolic present bias: A meta-analysis
Quasi-hyperbolic discounting is one of the most well-known and widely-used models to capture self-control problems in the economics literature. The underlying assumption of this model is that agents have a “present bias” toward current consumption such that all future rewards are downweighed relative to rewards in the present (in addition to standard exponential discounting for the length of delay). We report a meta-analytic dataset of estimates of the present bias parameter based on searches of all major research databases (62 papers with 81 estimates in total). We find that the literature shows that people are on average present biased for both monetary rewards (beta=0.82, 95% confidence interval of [0.74, 0.90]) and non-monetary rewards (beta=0.66, 95% confidence interval of [0.51, 0.85]) but that substantial heterogeneity exists across studies. The source of this heterogeneity comes from the subject pool, elicitation methodology, geographical location, payment method, mode of data collection (e.g. laboratory or field), and reward type. There is evidence of selective reporting and publication bias in the direction of overestimating the strength of present-bias (making
estimates smaller), but present bias still exists after correcting for these issues (for money beta=0.87 with 95% confidence interval of [0.82, 0.92] after correcting for selective reporting).
We present experimental evidence on bidding in second-price auctions with real objects. Our novel design, combining a second-price auction with an individual-specific binary-choice task based on the outcome of the auction, allows us to directly identify over-and under-bidding. We analyze bidding in real-object and induced-value auctions, and find significant deviations from truthful bidding in both. Overall, under-bidding is somewhat more prevalent than over-bidding; yet, the latter has a bigger magnitude, especially with induced values. At the individual level, we nd no relation between the tendency to deviate from truthful bidding in induced-value vs. real-object auctions.
Research in behavioral economics and reinforcement learning has given rise to two influential theories describing human economic choice under uncertainty. The first, prospect theory, assumes that decision-makers use static mathematical functions, utility and probability weighting, to calculate the values of alternatives. The second, reinforcement learning theory, posits that dynamic mathematical functions update the values of alternatives based on experience through reward prediction error (RPE). To date, these theories have been examined in isolation without reference to one another. Therefore, it remains unclear whether RPE affects a decision-maker’s utility and/or probability weighting functions, or whether these functions are indeed static as in prospect theory. Here, we propose a dynamic prospect theory model that combines prospect theory and RPE, and test this combined model using choice data on gambling behavior of captive macaques. We found that under standard prospect theory, monkeys, like humans, had a concave utility function. Unlike humans, monkeys exhibited a concave, rather than inverse-S shaped, probability weighting function. Our dynamic prospect theory model revealed that probability distortions, not the utility of rewards, solely and systematically varied with RPE: after a positive RPE, the estimated probability weighting functions became more concave, suggesting more optimistic belief about receiving rewards and over-weighted subjective probabilities at all probability levels. Thus, the probability perceptions in laboratory monkeys are not static even after extensive training, and are governed by a dynamic function well captured by the algorithmic feature of reinforcement learning. This novel evidence supports combining these two major theories to capture choice behavior under uncertainty.
We study economic decision-making of 284 people with obesity and pre-diabetes who participated in a 6-months randomised controlled trial to control weight and prevent diabetes. To elicit preferences, we use incentive-compatible experimental tasks that participants completed during their medical screening examination. We find that, on average, participants are risk averse, show no evidence of present bias, and have impatience levels comparable to healthy samples described in the international literature. Variations in present bias and impatience are not significantly associated with variations in markers of obesity. But we find a significant negative association between risk tolerance and BMI and other markers of obesity for women. A 1 standard deviation increase in risk tolerance is associated with a 0.2 standard deviation drop in BMI and waist circumference. Impatience moderates the link between risk tolerance and obesity. We replicate the key finding of interaction effects between risk and time preferences using survey data from a nationally representative sample of 6,281 Australians with similar characteristics. Deviating markedly from the literature, we conclude that risk tolerance brings benefits for health outcomes if combined with patience in this understudied but highly policy-relevant population.
We present a neuroeconomic model for risky choice that species a utility function that is context-dependent. We demonstrate how and under what conditions the model generates choice (but not preference) reversals. In a laboratory experiment, we test the predictions of our model and compare it against other popular models of context-dependent choice. We nd that divisive normalization captures violations of the independence of irrelevant alternatives that cannot be otherwise explained with salience theory, range normalization, or attraction eect theories. Moreover, we identify a new setting in which the well-established attraction effects do not occur.
Berger A. and Tymula A. (2019) Controlling ambiguity: The illusion of control in decision-making under risk and ambiguity [supplement]
The finding that individuals are ambiguity averse in the domain of medium likelihood gains is robust across laboratory studies. We conducted a laboratory experiment to examine whether we can lower this aversion to ambiguity by giving participants an illusion of control over the probability of winning by allowing them to choose the winning color in what objectively are 50-50 gambles. We found that while our illusion of control manipulation does not increase participants’ preference for risky gambles with known probability of winning, it does increase participants’ tolerance for ambiguous gambles with unknown probability of winning. When the illusion of control is absent, the structural model estimates of ambiguity tolerance are 29% lower. Our results highlight the importance of considering the illusion of control in the estimation of ambiguity attitudes.
We estimate whether risk preferences are affected by traumatic events by using a unique survey of Sri Lankan twins which contains information on individual’s exposure to the 2004 Indian Ocean Tsunami, participation as a combatant in the civil war, validated measures of mental health and risk preferences, and a rich set of control variables. Our estimation strategy utilises variation in experiences within twin pairs and allows us to explore wealth shocks and/or changes in mental health as mechanisms. We find that both events lead to less risk aversion, a result that is not driven by mental health or wealth changes.
We use an incentivized experiment to measure the risk and time preferences of truant adolescents and their parents. We find that adolescent preferences do not predict school attendance and that a unique police-school partnership program targeting school absences was most effective in reducing the truancy of adolescents with relatively risk-averse parents.
Less – traditional research output
Decision-making and ageing exhibit at the Museum of the National Academy of Sciences in Washington, DC (part of the Life Lab exhibit)
- on display May 2012 – September 2018