Testing Optimal Timing in Value-Linked Decision Making

Bhui, Rahul

doi:10.1007/s42113-019-0025-9

Cited by 18 publications

(19 citation statements)

References 74 publications

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“…We …nd that View clicks are decreasing in the length of the longest line but Implicit response times are increasing in the length of the longest line. Additionally, we …nd that View clicks are increasing across trials but Implicit response times are decreasing across trials.3 3 SeeHenmon (1911),Kellogg (1931),Bhui (2019b), andDu¤y and Smith (2020).…”

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confidence: 74%

Visual judgments of length in the economics laboratory: Are there brains in stochastic choice?

Duffy

Gussman

Smith

2021

Journal of Behavioral and Experimental Economics

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We design an induced value choice experiment where the objects are valued according to only a single attribute with a continuous measure. Subjects have an imperfect perception of the choice objects but can reduce their imperfect perception with cognitive e¤ort. Subjects are given a choice set involving several lines of various lengths and are told to select one of them. They strive to select the longest line because they are paid an amount that is increasing in the length of their selection. This "idealized" choice experiment produces a dataset that is uniquely suited to study apparently random choice. We also manipulate the available cognitive resources of the subjects by imposing either a high or low cognitive load. We …nd that both choices and the allocation of e¤ort are a¤ected by the material incentives in the choice problem and the available cognitive resources. We …nd evidence that optimal choices have shorter deliberation times than suboptimal choices, which is consistent with previous theoretical predictions. The distribution of errors can have signi…cant implications for the speci…cation of stochastic choice models. Speci…cations where errors have a Gumbel distribution appear to provide a better …t than those with a normal distribution. Despite that the cognitive load manipulation a¤ects both choice and search, it is notable that neither the Gumbel distribution results nor the relationship between optimal choice and deliberation time appear to be a¤ected by the available cognitive resources. This perhaps suggests that these results are general and persistent features of choice.

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confidence: 74%

Visual judgments of length in the economics laboratory: Are there brains in stochastic choice?

Duffy

Gussman

Smith

2021

Journal of Behavioral and Experimental Economics

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“…Interestingly, the theoretically optimal policy for the binary decision case ( Tajima et al, 2016 ) is inconsistent with empirical observations of magnitude-sensitive reaction-times ( Teodorescu et al ( 2016 ); Pirrone et al ( 2018a ); Steverson et al ( 2019 ); Zajkowski et al ( 2019 ); Turner et al ( 2019 ), but see Bhui ( 2019 )), unless assumptions are made that subjective utilities for decision-makers are nonlinear, or decisions are embedded in a fixed-length time period with known or learnable distributions of trial option values, so that a variable opportunity cost arises from decision time ( Tajima et al, 2016 ). Furthermore, even single-trial dynamics lead to magnitude sensitive reaction times ( Pirrone et al, 2018b ).…”

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confidence: 83%

Magnitude-sensitive reaction times reveal non-linear time costs in multi-alternative decision-making

Marshall

Reina

Pirrone

2021

Preprint

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Optimality analysis of value-based decisions in binary and multi-alternative choice settings predicts that reaction times should be sensitive only to differences in stimulus magnitudes, but not to overall absolute stimulus magnitude. Yet experimental work in the binary case has shown magnitude sensitive reaction times, and theory shows that this can be explained by switching from linear to geometric time costs, but also by nonlinear subjective utility. Thus disentangling explanations for observed magnitude sensitive reaction times is difficult. Here for the first time we extend the theoretical analysis of geometric time-discounting to ternary choices, and present novel experimental evidence for magnitude-sensitivity in such decisions. We consider the optimal policies for all possible combinations of linear and geometric time costs, and linear and nonlinear utility; interestingly, geometric discounting emerges as the predominant explanation for magnitude sensitivity.

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“…We are not the …rst authors to study choice in a setting where material outcomes depend on imperfectly perceived objects with objectively measurable properties. For instance, researchers have made payments to subjects as a function of judgments involving the relative quantity of dots (Caplin and Dean, 2015;Dutilh and Rieskamp, 2016), the dominant direction of moving dots (Bhui, 2019a;2019b), the number of ‡ickering dots (Oud et al, 2016), a dynamic display of dots (Zeigenfuse, Pleskac, and Liu, 2014), the heights of bars of dynamic size (Tsetsos et al, 2016), and the area occupied by objects of various sizes (Polanía, Krajbich, Grueschow, and Ru¤, 2014). 5 To our knowledge, Du¤y, Gussman, and Smith (2019) is the only other paper that describes a choice experiment where suboptimal choices are perfectly observable because utility Saito, and Tserenjigmid (2018), Koida (2018), Kovach and Tserenjigmid (2018), Caplin, Dean, and Leahy (2019), Cattaneo, Ma, Masatlioglu, and Suleymanov (2019), Conte and Hey (2019), and Natenzon (2019).…”

Section: Choice Involving Imperfectly Perceived Objectsmentioning

confidence: 99%

An Economist and a Psychologist Form a Line: What Can Imperfect Perception of Length Tell Us About Stochastic Choice?

Duffy¹,

Smith

2020

SSRN Journal

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Standard choice experiments are hampered by the fact that utility is either unknown or imperfectly measured by experimenters. As a consequence, the inferences available to researchers are limited. By contrast, we design a choice experiment where the objects are valued according to only a single attribute with a continuous measure and we can observe the true preferences of subjects. Subjects have an imperfect perception of the choice objects but can improve the precision of their perception with cognitive e¤ort. Subjects are given a choice set involving several lines of various lengths and are told to select one of them. They strive to select the longest line because they are paid an amount that increases with the length of their choice. Our design allows us to observe the search history, the response times, and make unambiguous conclusions about the optimality of choices. We …nd a negative relationship between the demanding nature of the choice problems and the likelihood that subjects select the optimal lines. We also …nd a positive relationship between the demanding nature of the choice problems and the response times. However, we …nd evidence that suboptimal choices are associated with longer response times than are optimal choices. This result appears to be consistent with Fudenberg, Strack, and Strzalecki (2018). Additionally, our experimental design permits a multinomial discrete choice analysis. Our results suggest that the errors in our data are better described as having a Gumbel distribution rather than a normal distribution. We also observe e¤ects consistent with memory decay and attention. Finally, we …nd evidence that choices in our experiment exhibit the independence from irrelevant alternatives (IIA) property.

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Testing Optimal Timing in Value-Linked Decision Making

Cited by 18 publications

References 74 publications

Visual judgments of length in the economics laboratory: Are there brains in stochastic choice?

Visual judgments of length in the economics laboratory: Are there brains in stochastic choice?

Magnitude-sensitive reaction times reveal non-linear time costs in multi-alternative decision-making

An Economist and a Psychologist Form a Line: What Can Imperfect Perception of Length Tell Us About Stochastic Choice?

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