Decision making costs and problem solving performance

McDaniel, Tanga; Rutström, E. Elisabet

doi:10.1007/bf01670010

Cited by 19 publications

(16 citation statements)

References 26 publications

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“…The QSR was apparently first used by McKelvey and Page [1990], and later by Offerman, Sonnemans and Schram [1996], McDaniel and Rutström [2001], Nyarko and Schotter [2002], Schotter and Sopher [2003], Costa-Gomes and Weizsäcker [2008] and Rutström and Wilcox [2009].…”

Section: A Previous Experimental Designsmentioning

confidence: 99%

Estimating subjective probabilities

et al. 2014

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ABSTRACT. Subjective probabilities play a role in many economic decisions. There is a large theoretical literature on the elicitation of subjective probabilities, and an equally large empirical literature. However, there is a gulf between the two. The theoretical literature proposes a range of procedures that can be used to recover subjective probabilities, but stresses the need to make strong auxiliary assumptions or "calibrating adjustments" to elicited reports in order to recover the latent probability. With some notable exceptions, the empirical literature seems intent on either making those strong assumptions or ignoring the need for calibration. We illustrate how the joint estimation of risk attitudes and subjective probabilities using structural maximum likelihood methods can provide the calibration adjustments that theory calls for. This allows the observer to make inferences about the latent subjective probability, calibrating for virtually any well-specified model of choice under uncertainty. We demonstrate our procedures with experiments in which we elicit subjective probabilities. We calibrate the estimates of subjective beliefs assuming that choices are made consistently with expected utility theory or rank-dependent utility theory. Inferred subjective probabilities are significantly different when calibrated according to either theory, thus showing the importance of undertaking such exercises. Our findings also have implications for the interpretation of probabilities inferred from prediction markets. † Department of Economics, Copenhagen Business School, Copenhagen, Denmark (Andersen); Department of Economics, University of Canterbury, Christchurch, New Zealand (Fountain); Department of Risk Management & Insurance and CEAR, Robinson College of Business, Georgia State University, USA (Harrison); and Robinson College of Business, Georgia State University, USA (Rutström). E-mail contacts: sa.eco@cbs.dk, john.fountain@canterbury.ac.nz, gharrison@gsu.edu and erutstrom@gmail.com. We thank the U.S. National Science Foundation for research support under grants NSF/HSD 0527675 and NSF/SES 0616746. We are grateful to John Duffy, Peter Wakker, Randall Walsh and Nathaniel Wilcox for discussions.-1-Subjective probabilities about some event are operationally defined as those probabilities that lead an agent to make certain choices over outcomes that depend on that event. These choices could be as natural as placing a bet on a horse race, or as structured as responding to the payoffs provided by some scoring rule. In order to infer subjective probabilities from observed choices of this kind, however, one either has to make some strong assumptions about risk attitudes or jointly estimate risk attitudes and subjective probabilities. We show how the latter can be implemented by pairing several tasks together, some of which identify risk attitudes and some of which identify the interplay between risk attitudes and subjective probabilities. Joint estimation of a structural model of choice across these two types of ta...

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Section: A Previous Experimental Designsmentioning

confidence: 99%

Estimating subjective probabilities

et al. 2014

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“…Clark [1997] discusses the cognitive process as involving not just resources embedded in our bodies, but also other tools and resources that we naturally use in decision making, problem solving, and learning. Consider the Tower of Hanoi game which has been extensively studied by cognitive psychologists (e.g., Hayes and Simon [1974]) and more recently by economists (McDaniel and Rutström [2001]). The physical form of the game, as found in all serious Montessori classrooms, is shown in Figure 1.…”

Section: Experimental Economics In the Laboratory And The Fieldmentioning

confidence: 99%

Virtual experiments and environmental policy

Fiore

Harrison

Hughes

et al. 2009

Journal of Environmental Economics and Management

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107

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“…There is an extensive (inconclusive) literature in economics and psychology on the channels through which intrinsic motivation could interact with financial incentives in stimulating mental or physical effort and performance (e.g., Deci et al, 1999;Gneezy and Rustichini, 2000;McDaniel and Rutström, 2001;Ariely et al, 2009). Not addressing the complex interactions, we measure intrinsic motivation to account for the possibility that subjects are ex ante differentially motivated to solve the guessing games or that intrinsic motivation correlates with subjects' measured cognitive abilities.…”

Section: Cognitive Personality and Demographic Characteristicsmentioning

confidence: 99%

Three very simple games and what it takes to solve them

Rydval

Ortmann

Ostatnicky

2009

Journal of Economic Behavior & Organization

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a b s t r a c tWe study experimentally the nature of dominance violations in three minimalist dominance-solvable guessing games. Only about a third of our subjects report reasoning consistent with dominance; they all make dominant choices and almost all expect others to do so. Nearly two-third of our subjects report reasoning inconsistent with dominance, yet a quarter of them actually make dominant choices and half of those expect others to do so. Reasoning errors are more likely for subjects with lower working memory, intrinsic motivation and premeditation attitude. Dominance-incompatible reasoning arises mainly from subjects misrepresenting the strategic nature (payoff structure) of the guessing games.

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Decision making costs and problem solving performance

Cited by 19 publications

References 26 publications

Estimating subjective probabilities

Estimating subjective probabilities

Virtual experiments and environmental policy

Three very simple games and what it takes to solve them

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