Sequential evidence accumulation in decision making: The individual desired level of confidence can explain the extent of information acquisition
Journal Title: Judgment and Decision Making - Year 2008, Vol 3, Issue 3
Abstract
Judgments and decisions under uncertainty are frequently linked to a prior sequential search for relevant information. In such cases, the subject has to decide when to stop the search for information. Evidence accumulation models from social and cognitive psychology assume an active and sequential information search until enough evidence has been accumulated to pass a decision threshold. In line with such theories, we conceptualize the evidence threshold as the “desired level of confidence” (DLC) of a person. This model is tested against a fixed stopping rule (one-reason decision making) and against the class of multi-attribute information integrating models. A series of experiments using an information board for horse race betting demonstrates an advantage of the proposed model by measuring the individual DLC of each subject and confirming its correctness in two separate stages. In addition to a better understanding of the stopping rule (within the narrow framework of simple heuristics), the results indicate that individual aspiration levels might be a relevant factor when modelling decision making by task analysis of statistical environments.
Authors and Affiliations
Daniel Hausmann and Damian Läge
Keywords
Related Articles
- EP ID EP677618
- DOI -
- Views 169
- Downloads 0
Boosting intelligence analysts’ judgment accuracy: What works, what fails?
A routine part of intelligence analysis is judging the probability of alternative hypotheses given available evidence. Intelligence organizations advise analysts to use intelligence-tradecraft methods such as Analysis of...
The effects of total sleep deprivation on bayesian updating
Subjects performed a decision task (Grether, 1980) in both a well-rested and experimentally sleep-deprived state. We found two main results: 1) final choice accuracy was unaffected by sleep deprivation, and yet 2) the es...
A marketing science perspective on recognition-based heuristics (and the fast-and-frugal paradigm)
Marketing science seeks to prescribe better marketing strategies (advertising, product development, pricing, etc.). To do so we rely on models of consumer decisions grounded in empirical observations. Field experience su...
Does menu design influence retirement investment choices? Evidence from Italian occupational pension funds
Previous research has demonstrated that consumers’ decisions regarding supplementary pensions could be affected by biases. Bernatzi and Thaler’s experiment demonstrated that menu design can influence pension fund enrollm...
Why choose wisely if you have already paid? Sunk costs elicit stochastic dominance violations
Sunk costs have been known to elicit violations of expected utility theory, in particular, the independence or cancellation axiom. Separately, violations of the stochastic dominance principle have been demonstrated in va...