Are Resource Fluctuations Anticipated in Resource Allocation Tasks?

Abstract

Resource-allocation behavior has recently received increasing attention in the decision-theory literature partially because individuals and societies are facing hard decisions about the allocation of constrained resources. We observed in two previous studies that resource allocators do not plan for probable losses in loss situations, but instead react to losses after they occur. In this paper, we determine if a similar failure to anticipate changes in resources occurs in a gain situation. The data suggest that subjects do not allocate their resources in anticipation of probable gains or losses, thus considerably increasing the generality of our previous findings.