Figure 1.

Context-sensitive effects. (a) A foraging owl might reject relatively scrawny prey (squirrel) in a rich environment where rabbits are often available, but accept the same option in a poorer one. (b) People learn by trial and error to choose between options rewarded noisily with different expected value (EV, not shown to participants). People who learn that option C (a small loss in expectation) is preferred in its training context will sometimes choose it, in later probes, over an objectively better option (B, a small expected gain) which had been the worse option in its respective training context. (c) Because nominal gains have diminishing marginal utility and nominal losses have diminishing marginal dysutility, preference can shift between risk averse and risk seeking when the same outcomes are framed (relative to a different reference) as gains versus losses.