Decision irrationalities involving deadly risks
| Autor: | W. Kip Viscusi, Scott DeAngelis |
|---|---|
| Rok vydání: | 2018 |
| Předmět: |
Economics and Econometrics
media_common.quotation_subject 05 social sciences Ambiguity aversion Rationality Ambiguity Bayesian inference Outcome (game theory) Bounded rationality Preference Accounting 0502 economics and business 050206 economic theory 050207 economics Psychology Function (engineering) Finance media_common Cognitive psychology |
| Zdroj: | Journal of Risk and Uncertainty. 57:225-252 |
| ISSN: | 1573-0476 0895-5646 |
| Popis: | This article provides an experimental analysis of two-armed bandit problems that have a different structure in which the first unsuccessful outcome leads to termination of the game. It differs from a conventional two-armed bandit problem in that there is no opportunity to alter behavior after an unsuccessful outcome. Introducing the risk of death into a sequential decision problem alters the structure of the problem. Even though play ends after an unsuccessful outcome, Bayesian learning after successful outcomes has a potential function in this class of two-armed bandit problems. Increasing uncertainty boosts the chance of long-term survival since ambiguous probabilities of survival are increased more after each successful outcome. In the independent choice experiments, a slim majority of participants displayed a preference for greater risk ambiguity. Particularly in the interdependent choice experiments, participants were overly deterred by ambiguity. For both independent and interdependent choices, there were several dimensions on which participants displayed within session rationality. However, participants failed to learn and improve their strategy over a series of rounds, which is consistent with evidence of bounded rationality in other challenging games. |
| Databáze: | OpenAIRE |
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