Experimental evidence on case-based decision theory

Ossadnik, Wolfgang; Wilmsmann, Dirk; Niemann, Benedikt

doi:10.1007/s11238-012-9333-4

Cited by 20 publications

(14 citation statements)

References 31 publications

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“…(The authors of CBDT suspect that it is a better model of human behavior in settings of ambiguity versus risk.) Ossadnik et al (2012) find that CBDT explains these data well compared to alternatives such as minimax (Luce and Raiffa 1957) and reinforcement learning (Roth and Erev 1995a). Their method has some similarities with CBSA, in that they choose parameter values and functional forms of CBDT and calculate CBDT-governed agents' optimal choices, and compare those choices to aggregate human data.…”

Section: Related Literaturementioning

confidence: 96%

Predicting human cooperation in the Prisoner’s Dilemma using case-based decision theory

Guilfoos

Pape

2015

Theory Decis

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In this paper, we show that Case-based decision theory, proposed by Gilboa and Schmeidler (Q J Econ 110 (3): 1995), can explain the aggregate dynamics of cooperation in the repeated Prisoner's Dilemma, as observed in the experiments performed by Camera and Casari (Am Econ Rev 99:979-1005, 2009). Moreover, we find CBDT provides a better fit to the dynamics of cooperation than does the existing Probit model, which is the first time such a result has been found. We also find that humans aspire to a payoff above the mutual defection outcome but below the mutual cooperation outcome, which suggests they hope, but are not confident, that cooperation can be achieved. Finally, our best-fitting parameters suggest that circumstances with more details are easier to recall. We make a prediction for future experiments: if the repeated PD were run for more periods, then we would be begin to see an increase in cooperation, most dramatically in the second treatment, where history is observed but identities are not. This is the first application of Case-based decision theory to a strategic context and the first empirical test of CBDT in such a context. It is also the first application of bootstrapped standard errors to an agent-based model.

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Section: Related Literaturementioning

confidence: 96%

Predicting human cooperation in the Prisoner’s Dilemma using case-based decision theory

Guilfoos

Pape

2015

Theory Decis

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“…16 The relatively coarse and simpli…ed version of the feature based similarity function that we employ makes the same predictions as a more generalized similarity function used by Gilboa et. al (2006) in all but one market.…”

Section: Predictions and Hypothesesmentioning

confidence: 99%

“…16 For each scenario, a case-based DM would count the number of conditions for which the symbol that is given in the scenario matches the symbol that is given in the current market report. Looking at Figure 1, we can see that scenario 1 has three conditions in which the symbols are the same as in the current report (namely wind, humidity and temperature).…”

Section: Predictions and Hypothesesmentioning

confidence: 99%

“……nancial markets, Guerdjikova, 2002 and2003; housing markets, Gayer et al, 2007; and capacity planning, Jahnke et al, 2005), little experimental evidence has been gathered by economists to test the plausibility of the reasoning suggested by Hume which is distinct from what is usually assumed in economics. Ossadnik et al (2013) …nd support for the predictive power of CBDT in repeated decision problems of structural ignorance. Our paper provides a …rst such test for a one-shot decision problem.…”

Section: Introductionmentioning

confidence: 99%

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An experiment on case-based decision making

2015

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We experimentally investigate the disposition of decision makers to use case-based reasoning as suggested by Hume (1748) and formalized by Case-Based Decision Theory (Gilboa and Schmeidler, 1995). Our subjects face a monopoly decision problem about which they have very limited information. Information is presented in a manner which makes similarity judgements according to the feature matching model of Tversky (1977) plausible. We provide subjects a "history" of cases. In the 2 2 between-subject design, we vary whether information about the current market is given and whether immediate feedback about obtained pro…ts is provided. The results provide support for the predictions of Case-Based Decision Theory, particularly when no immediate feedback is provided.JEL Classi…cations: C91; D01; D81

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“…Up to now, most experimental tests of CBDT have been designed on the premise that CBDT and EUT are complementary theories. For example, Ossadnik et al (2013) set up an experimental environment of "structural ignorance" (p. 212), and compare the explanatory power of CBDT with that of three alternative criteria for decision under ignorance -maximin, maximax, and the pessimism-optimism criterion of Arrow and Hurwicz (1972). Similarly, Grosskopf et al (2015) start from the explicit premise that CBDT "is not proposed as an alternative to or a generalization of [EUT]" (p. 640), and use an experimental environment in which "EUT is not a reasonable alternative decision-making procedure" (p. 652).…”

Section: Introductionmentioning

confidence: 99%

Correlation neglect and case-based decisions

2019

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In most theories of choice under uncertainty, decision-makers are assumed to evaluate acts in terms of subjective values attributed to consequences and probabilities assigned to events. Case-based decision theory (CBDT), proposed by Gilboa and Schmeidler, is fundamentally different, and in the tradition of reinforcement learning models. It has no state space and no concept of probability. An agent evaluates each available act in terms of the consequences he has experienced through choosing that act in previous decision problems that he perceives to be similar to his current problem. Gilboa and Schmeidler present CBDT as a complement to expected utility theory (EUT), applicable only when the state space is unknown. Accordingly, most experimental tests of CBDT have used problems for which EUT makes no predictions. In contrast, we test the conjecture that case-based reasoning may also be used when relevant probabilities can be derived by Bayesian inference from observations of random processes, and that such reasoning may induce violations of EUT. Our experiment elicits participants' valuations of a lottery after observing realisations of the lottery being valued and realisations of another lottery. Depending on the treatment, participants know that the payoffs from the two lotteries are independent, positively correlated, or negatively correlated. We find no evidence of correlation neglect indicative of case-based reasoning. However, in the negative correlation treatment, valuations cannot be explained by Bayesian reasoning, while stated qualitative judgements about chances of winning can.

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Experimental evidence on case-based decision theory

Cited by 20 publications

References 31 publications

Predicting human cooperation in the Prisoner’s Dilemma using case-based decision theory

Predicting human cooperation in the Prisoner’s Dilemma using case-based decision theory

An experiment on case-based decision making

Correlation neglect and case-based decisions

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