2014-07-29
The effect of sampling strategies in decision from experience
Publication
Publication
This paper concentrates on the relation between information search and weighting of rare events in decision from experience. Previous research found a consistent description-experience gap in weighting of rare events, as people overweight rare events when facing description-based decisions and underweight rare events when facing experience-based decisions. Using Erev et al. (2010) database, I identify two search strategies drawn from Bayesian decision theory: Pascal strategy and binomial strategy. In choices made after Pascal strategy, where the decision to stop searching is conditioned on the encountering of r rare events, subjects over-weight rare events more than in choices made after binomial strategy, where the decision to stop searching is unaffected by the number of rare events encountered. Splitting choices in Pascal/binomial is a way of interpreting the search process. Another way is dividing subjects into avid and frugal searchers (Hertwig & Pleskac 2010). Making a synthesis of those two ways of interpreting the search process could shed light on the link between information search and the description-experience gap.
Additional Metadata | |
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Aydogan, I. | |
hdl.handle.net/2105/16374 | |
Business Economics | |
Organisation | Erasmus School of Economics |
Morgia, M. (2014, July 29). The effect of sampling strategies in decision from experience. Business Economics. Retrieved from http://hdl.handle.net/2105/16374
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