Forgetting the past: Individual differences in recency in subjective valuations from experience.

Ashby, Nathaniel J. S.; Rakow, Tim

doi:10.1037/a0036352

Cited by 28 publications

(74 citation statements)

References 32 publications

(51 reference statements)

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Section: Reinforcement Learningmentioning

confidence: 99%

“…If, as proposed by Yechiam and Hochman (2013a), sellers pay more attention to the task than buyers, they might manifest lower recency, that is, ϕ WTA should be closer to 1 than ϕ WTP is. Third, we tested the natural-mean rule, which has been found to provide a good description of decisions from experience (Ashby & Rakow, 2014;Hertwig & Pleskac, 2008;Wulff & Pachur, 2016). In contrast to the value-updating rule, the natural-mean rule weights all experiences equally and thus simply represents the average across all experienced outcomes of a lottery:…”

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confidence: 99%

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confidence: 99%

“…The sampling paradigm-and decisions from experience in general-are increasingly employed to examine risky choice, in particular because it lays open the underlying search and learning processes (e.g., Newell & Camilleri, 2011;Hertwig, 2015;Hills & Hertwig, 2010;Lejarraga, Hertwig, & Gonzalez, 2012;Rakow, Demes, & Newell, 2008;Rakow & Newell, 2010). Decisions from experience are also increasingly being used to study pricing decisions for individual objects (e.g., Ashby & Rakow, 2014;Golan & Ert, 2015).For greater generality of our model comparison and because none of the currently existing formal frameworks can accommodate all of the accounts of buyer-seller differences mentioned above, we implemented the accounts in three computational frameworks: reinforcement learning (e.g., Sutton & Barto, 1998;Yechiam & Busemeyer, 2005), instance-based learning theory (Gonzalez & Dutt, 2011), and cumulative prospect theory (Tversky & Kahneman, 1992). One important difference between the frameworks is that whereas reinforcement learning models and instance-based learning theory can also model how an option's attractiveness is sequentially learned from experience, cumulative prospect theory has been originally developed for situations in which information about the outcomes and probabilities of lotteries are summarized to participants.…”

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confidence: 99%

“…If sellers learn faster than buyers (e.g., because they invest more cognitive resources in the task), one might expect a higher value for the former than for the latter, that is, ϕ WTA > ϕ WTP . An alternative updating process is formulated by the valueupdating rule (Ashby & Rakow, 2014;Hertwig, Barron, Weber, & Erev, 2006), according to which the expectancy of the option at trial t is determined asAs in the delta rule, the parameter ϕ [0 ≤ ϕ] governs the impact of previous experiences. With ϕ < 1 the rule yields recency (i.e., stronger impact of more recent experiences); with ϕ > 1 it yields primacy (i.e., stronger impact of less recent experiences).…”

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Unpacking buyer-seller differences in valuation from experience: A cognitive modeling approach

Pachur

Scheibehenne

2017

Psychon Bull Rev

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People often indicate a higher price for an object when they own it (i.e., as sellers) than when they do not (i.e., as buyers)-a phenomenon known as the endowment effect. We develop a cognitive modeling approach to formalize, disentangle, and compare alternative psychological accounts (e.g., loss aversion, loss attention, strategic misrepresentation) of such buyer-seller differences in pricing decisions of monetary lotteries. To also be able to test possible buyer-seller differences in memory and learning, we study pricing decisions from experience, obtained with the sampling paradigm, where people learn about a lottery's payoff distribution from sequential sampling. We first formalize different accounts as models within three computational frameworks (reinforcement learning, instance-based learning theory, and cumulative prospect theory), and then fit the models to empirical selling and buying prices. In Study 1 (a reanalysis of published data with hypothetical decisions), models assuming buyer-seller differences in response bias (implementing a strategicmisrepresentation account) performed best; models assuming buyer-seller differences in choice sensitivity or memory (implementing a loss-attention account) generally fared worst. In a new experiment involving incentivized decisions (Study 2), models assuming buyer-seller differences in both outcome sensitivity (as proposed by a loss-aversion account) and response bias performed best. In both Study 1 and 2, the models implemented in cumulative prospect theory performed best. Model recovery studies validated our cognitive modeling approach, showing that the models can be distinguished rather well. In summary, our analysis supports a loss-aversion account of the endowment effect, but also reveals a substantial contribution of simple response bias. Keywords Computational modeling . Endowment effect . Risky decision making . Decision from experience . Loss aversionThe minimum price at which people are willing to accept to sell an object they own is often higher than the maximum price they are willing to pay for the same object when they do not own it. This systematic difference between buying and selling prices-which can also occur within the same person when taking different perspectives-is known as the endowment effect (Kahneman, Knetsch, & Thaler, 1990, 1991Thaler, 1980; see also Birnbaum & Stegner, 1979). The endowment effect has attracted considerable attention because it contradicts a central tenet of economic theory: According to the Coase theorem, the value of an object should be independent of its initial ownership (Kahneman et al., 1990).There have been several proposals as to which cognitive mechanisms give rise to the endowment effect, or how buyers' and sellers' cognitive mechanisms might differ generally.1 For instance, there may be asymmetries between buyers and sellers in terms of the order in which they search for positive 1 Note that this issue is orthogonal to the question of which aspects of being endowed-such as ownership, expectations...

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Section: Reinforcement Learningmentioning

confidence: 99%

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confidence: 99%

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confidence: 99%

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confidence: 99%

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Unpacking buyer-seller differences in valuation from experience: A cognitive modeling approach

Pachur

Scheibehenne

2017

Psychon Bull Rev

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Allais from Experience: Choice Consistency, Rare Events, and Common Consequences in Repeated Decisions

Harman

González

2015

Behavioral Decision Making

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The Allais Paradox is a well-known bias in which people's preferences result in contradictory choices between two normatively identical gamble pairs. Studies have shown that these preference reversals depend on how information is described and presented. In an experiment, we investigate the Allais gambles in several formats including an experiential paradigm, where participants make selections from two blank buttons and get an outcome as a result of a draw from distributions of outcomes in the selected gamble. Results indicate that a large proportion of Allais reversals are found in the traditional descriptive format, they are reduced when gambles are presented in a descriptive table format, and they disappear when choices are made from experience. Although a majority of participants made consistent choices from experience, the proportion of individual reversals is similar to that of descriptive choices. Detailed analyses of experiential choice suggest interesting behavioral differences between participants classified as consistent and those classified as reversals: consistent participants explore and maximize more than reversal participants. Furthermore, consistent participants demonstrate a different switching behavior after experiencing a rare outcome than do reversal participants. We find that, both, overweighting or underweighting of rare outcomes may occur within the course of an individual's experience; depending on the timing of those experiences, the magnitude of the outcomes observed, and the general accumulated value of the gambles.

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Eyes on the Prize? Evidence of Diminishing Attention to Experienced and Foregone Outcomes in Repeated Experiential Choice

Ashby

Rakow

2015

Behavioral Decision Making

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Recently there has been increased interest in decisions-from-experience (where decision makers learn from observing the outcomes of previous choices), which provide valuable insights into the learning and preference construction processes underlying many daily decisions. Several process models have been developed to capture these processes, and while such models often fit the data well, many assume that the decision maker is a vigilant observer, processing each outcome. In two studies, we provide a critical test of this assumption using eye tracking to record directed visual attention when participants choose repeatedly among two options, each time being shown the outcome for their chosen option and for the foregone option. Consistently, we find that the vigilance assumption is not supported, with decision makers often not attending to outcome information. Moreover, (in)attention to outcomes is predictable, with vigilance decreasing as more choices are made, and being greater for obtained than for foregone outcomes, and when options deliver only gains as opposed to losses, or a mixture of gains and losses. Furthermore, we find that this variation in attentional allocation plays a central role in the apparent indecisiveness (inconsistency) in choice, with increased attention to foregone outcomes predicting switches to that option on the next choice. Together, these findings highlight the value of eye tracking in investigations of decisions-from-experience, providing novel insight into cognitive processes underlying them.

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Forgetting the past: Individual differences in recency in subjective valuations from experience.

Cited by 28 publications

References 32 publications

Unpacking buyer-seller differences in valuation from experience: A cognitive modeling approach

Unpacking buyer-seller differences in valuation from experience: A cognitive modeling approach

Allais from Experience: Choice Consistency, Rare Events, and Common Consequences in Repeated Decisions

Eyes on the Prize? Evidence of Diminishing Attention to Experienced and Foregone Outcomes in Repeated Experiential Choice

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