Aiming to Choose Correctly or to Choose Wisely? The Optimality-Accuracy Trade-Off in Decisions Under Uncertainty

Abstract

To cite this version:Thomas Garcia, Sébastien Massoni. Aiming to choose correctly or to choose wisely? The optimalityaccuracy trade-off in decisions under uncertainty . 2017. halshs-01631540WP 1714 -April 2017, this version November 2017 Aiming to choose correctly or to choose wisely? The optimality-accuracy trade-off in decisions under uncertainty Thomas Garcia, Sébastien Massoni Abstract:When making a decision under uncertainty, individuals aim to achieve opti-mality. In general, an accurate decision is optimal. However, in real life situations asymmetric stakes induce an unusual divergence between optimality and accuracy. We highlight this optimality-accuracy trade-off and study its origins using two experiments on perceptual decision making. We use Signal Detection Theory as a normative benchmark. The first experiment confirms the existence of an optimality-accuracy trade-off with a leading role of accuracy. The second experiment explains this trade-off by the concern of people for being right. Keywords:Optimality, accuracy, signal detection theory, incentives, experiment JEL codes: AbstractWhen making a decision under uncertainty, individuals aim to make the best choice. In general, the best solution, defined as the optimal solution, is the solution maximizing expected benefits. However, the quality of a decision can also be assessed based on the accuracy of the decision. While most of the time an accurate decision leads to the optimal decision, different types of successes and errors rewarded asymmetrically induce a divergence between accuracy and optimality. In this situation, individuals may face a trade-off between maximizing accuracy and maximizing expected benefits. Using Signal Detection Theory as a normative benchmark, we highlight this optimality-accuracy trade-off and study its origins using two laboratory experiments on perceptual decision-making. The first experiment confirms the existence of the trade-off with a leading role of accuracy. It also gives evidence on the prevalence of a payoff approach over an utility approach to assess *

Information Order Shifts Criterion Placement in Perceptual Decisions

“…M 17 conserves a similar pattern with intermediate values. All matrices give the same expected payoff for perfect performance (11 points) but vary regarding expected payoff for random guess (1 obtained that pure-gain, pure-loss and mixed gain-loss frameworks do not affect criterion placement Garcia and Massoni, 2017).…”

“…A robust finding is that facing perceptual decisions most individuals adopt a decision strategy leading to over-accurate but sub-optimal answers (Pitz and Downing, 1967;Maddox and Bohil, 1998;Bohil and Maddox, 2001;Garcia and Massoni, 2017). This bias toward accuracy is referred as "conservative criterion placement".…”