Article2011

The Effect of Foregone Outcomes on Choices From Experience

22 citations0/0 files storedExperimental Psychology (formerly Zeitschrift für Experimentelle Psychologie)

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Decision-Making and Behavioral Economics Neural and Behavioral Psychology Studies Experimental Behavioral Economics Studies

Abstract

We examined the relative weight given to obtained and foregone outcomes (i.e., outcomes from the non-chosen options) in repeated choices using cognitive modeling. Previous modeling studies have yielded mixed results. When participants' choices are analyzed by models that predict the next choice ahead in a sequence of decisions, the results imply that people give less weight to foregone than to obtained outcomes. In contrast, in simulation models of n trials ahead, the results imply that, on average, people give equal weight to foregone and obtained outcomes. Using datasets of experience-based binary choices with fixed (stationary) payoff distributions (Erev & Haruvy, in press) and dynamic (nonstationary) payoff distributions (Rakow & Miler, 2009), we employed generalization tests at the individual level to examine whether the findings derived from the one-step-ahead method are due to overfitting. The results of trial-ahead model fitting implied that for the nonstationary tasks only, foregone outcomes received lower weight. However, when this dataset was assessed via generalization criteria at the individual level, equal weighting of foregone and obtained outcomes was the best assumption. This implies that overfitting is implicated in the superior fit of models that assume discounting of foregone outcomes.

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References

1995The Handbook of experimental economics 1962Individual Choice Behavior 1999Experience-weighted Attraction Learning in Normal Form Games 1999Anticipated regret, expected feedback and behavioral decision making 2005On Adaptation, Maximization, and Reinforcement Learning Among Cognitive Strategies.1995Consistency and cautious fictitious play 2008Comparison of Decision Learning Models Using the Generalization Criterion Method 2005Comparison of basic assumptions embedded in learning models for experience-based decision making

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2020Losing my loss aversion: The effects of current and past environment on the relative sensitivity to losses and gains 2020The influence of biased exposure to forgone outcomes 2015Forgone but not forgotten: the effects of partial and full feedback in “harsh” and “kind” environments 2020Timing of descriptions shapes experience‐based risky choice 2022Patterns of choice adaptation in dynamic risky environments

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