From the Economic Domain to the Social Domain: Uncertainty in Decision-Making

Xue Jinghua; Zhu Ruida; Liu Chao

doi:10.16719/j.cnki.1671-6981.20240216

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Journal of Psychological Science ›› 2024, Vol. 47 ›› Issue (2) : 384-392. DOI: 10.16719/j.cnki.1671-6981.20240216

Social, Personality & Organizational Psychology

From the Economic Domain to the Social Domain: Uncertainty in Decision-Making

Xue Jinghua¹, Zhu Ruida², Liu Chao¹

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Abstract

Due to the limitation of information and environmental factors, uncertainty widely exists in various kinds of decision-making. Uncertainty refers to the degree of precision with which individuals can make predictions based on available information. In the economic domain, uncertainty revolves around probabilistic information regarding monetary gains or losses and investigates individuals' choices in the face of uncertain financial outcomes. While research on uncertainty in the economic domain is well-established, recent efforts have focused on understanding uncertainty in the social domain. Social interactions often involve numerous uncertain decisions due to challenges in understanding others' intentions and behaviors. Social uncertainty reflects the degree to which individuals' uncertainty about their own future states and actions is influenced by uncertainty about others' states and actions. Uncertainty in both the economic and social domains presents distinct categories of challenges that humans encounter and endeavor to resolve. The "social brain" hypothesis posits that individuals may employ different cognitive and neural mechanisms when processing social information in contrast to non-social information. Hence, it is crucial to investigate the shared and distinctive psychological and neural mechanisms individuals employ when confronted with uncertainty in these separate domains.
This paper will first introduce the fundamental theory of uncertainty research, which categorizes uncertainty into risk uncertainty and ambiguity uncertainty based on the availability of existing information. Risk uncertainty involves explicit probabilities associated with potential outcomes, whereas ambiguity uncertainty involves unknown probabilities associated with potential outcomes. Additionally, important models such as the Subjective Expected Utility Model and the Max-min Expected Utility Model help quantify individuals' cognitive processes in response to uncertainty, with the latter effectively distinguishing and quantifying individuals' attitudes towards risk and ambiguity. Subsequently, this paper will expound upon the shared impacts of uncertainty in the economic and social domains on emotional responses. Faced with uncertainty, individuals tend to exhibit a degree of aversion and often seek to avoid or reduce uncertainty. Furthermore, uncertainty aversion has been correlated with activation in the anterior insula. The distinct influence of uncertainty in the economic and social domains on individual psychology and behavior will be discussed, along with the underlying cognitive and neural mechanisms. Through comparing and analyzing the differences between uncertainty in the economic domain and the social domain, it shows that social uncertainty encompasses broader and more complex sources compared to the economic domain. Uncertainty in economic decision-making initially triggers changes in attention and cognitive resources, and facilitates the adoption of corresponding learning mechanisms and behavioral strategies. Ultimately, it influences the evaluation of economic outcomes in terms of rewards and punishments. Conversely, uncertainty in social decision-making affects the initial assessments of others, subsequently influencing interaction strategies, and involving feedback and social learning derived from the outcomes of social interactions.
Regarding the differences in the impact pathways of uncertainty within these two domains, we further integrate them into three stages: the initial stage, the action stage, and the feedback stage. Overall, individuals exhibit distinct cognitive strategies and behavioral patterns across these three stages of economic and social decision-making under the influence of uncertainty, which supports the "social brain" hypothesis to some extent. Individuals aim to reduce uncertainty to make future states and outcomes more predictable. But the specific goals and execution processes differ between the economic and social domains. The "social brain" hypothesis contributes to a better understanding of the differences in the impact of uncertainty in these two domains.
In conclusion, this paper summarizes the limitations of the current study and provides some recommendations for future research. Future research should explore the differential impact of risk and ambiguity attitudes, examine the benefits of uncertainty and related neural mechanisms, draw insights from classical paradigms and models within the economic domain to study uncertainty within the social domain, and investigate the transferability and generalizability of uncertainty effects between the economic and social domains.

Key words

uncertainty / economic domain / social domain / risk aversion / ambiguity aversion / neural mechanism

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Xue Jinghua, Zhu Ruida, Liu Chao. From the Economic Domain to the Social Domain: Uncertainty in Decision-Making[J]. Journal of Psychological Science. 2024, 47(2): 384-392 https://doi.org/10.16719/j.cnki.1671-6981.20240216

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