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Theory and Decision

Erschienen in:

26.01.2018

Behavioral patterns and reduction of sub-optimality: an experimental choice analysis

verfasst von: Daniela Di Cagno, Arianna Galliera, Werner Güth, Noemi Pace

Erschienen in: Theory and Decision | Ausgabe 2/2018

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Abstract

This paper attempts to identify behavioral patterns and compare their average success considering several criteria of bounded rationality. Experimentally observed choice behavior in various decision tasks is used to assess heterogeneity in how individual participants respond to 15 randomly ordered portfolio choices, each of which is experienced twice. Treatments differ in (not) granting probability information and in (not) eliciting aspirations. Since in our setting neither other regarding concerns nor risk attitude matter and probability of the binary chance move is (optimal) choice irrelevant, categorizing decision types relies on parameter dependence and choice adaptations. We find that most participants reduce systematically sub-optimality when following the identified criteria.

Vorheriger Artikel Are groups ‘less behavioral’? The case of anchoring

Nächster Artikel The joy of ruling: an experimental investigation on collective giving

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For an analysis of the concepts of aspiration and satisficing, see the seminal contributions of Simon (1955), Siegel (1957) and Manski (2017) Sauermann and Selten (1962) and Selten (1998) for the adaptation theory (AAT). For experimental analyses, see Selten et al. (2012) and Hey et al. (2017).

To avoid other relevant concerns, see Harrison and Johnson (2006).

This induces risk neutrality in decision-making (see Roth and Malouf 1979, for an early use in bargaining).

For a critical assessment, see Selten et al. (1999) which, however, questions expected utility theory, not binary lottery incentives. Rejecting binary lottery incentives but maintaining expected utility theory is impossible.

Di Cagno et al. (2017) also analyze three control cases with \(c=0\).

The probability information is the only difference between T1 and T2.

In the experimental setting of T3 and T4 the aspiration level is set on the €14 bar probabilities and we avoid confusion with the second (complementary) bar.

Paying participants only for a random round is required by binary-lottery incentives and avoids past-earnings effects.

In a similar manner, one could check slider positions for \(i_{t^*-\tau }\le {i^*}\) with \(\tau =1,2\) to determine whether they return to the range \([0,i^*]\) via \(i_{t^*}\le {i^*}\); however, such an analysis is omitted because only too few data are available.

We adopt the \(60\%\) individual level of compliance per phase.

The reason for distinguishing phases 1 and 2 in Table 10 is that the categorization of the eight behavioral categories is independently performed for phase 1 and phase 2 data, i.e., an individual participant may belong in phase 2 to a different class than in phase 1.

Table 14 (in the Appendix A) additionally controls for whether participants switch categories from phase 1 to 2. Again, the dominant categories are those with (yes, yes, yes)-participants in both phases (41 in T1 and 31 in T2), whose average non-improving score in phase 2 is 2.68 in T1 and 2.74 in T2, i.e. slightly lower than the respective phase 2-score in Table 10.

An exception is phase 1 of T2 and the case (no, yes, yes), whose non-improving frequency score is 3.30 and thus smaller than the score of 3.46 for (yes, yes, yes).

Exceptions exist is phase 1 of T4, e.g. case (no, yes, yes) with only 7 participants whose non-improving score is 5.43, less than 6.00 for (yes, yes, yes).

Thus, we obviously cannot refer separately to phases 1 and 2 and note the greater success in phase 2 than in phase 1.

In the following analysis, as in the previous, compliance with a selected criterion is calculated based on 60% average compliance.

We admit that our method of incentivizing aspiration formation by letting participants lose all chances of earning more €14, rather than only €4 is partly responsible for the striking confirmation of satisficing, at least in phase 2 of treatments T3 and T4.

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Di Cagno, D. T., Galliera, A., Güth, W., Marzo, F., & Pace, N. (2017). (Sub) Optimality and (non) optimal satisficing in risky decision experiments. Theory and Decision, 83(2), 195–243.CrossRef

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Titel: Behavioral patterns and reduction of sub-optimality: an experimental choice analysis
verfasst von: Daniela Di Cagno
Arianna Galliera
Werner Güth
Noemi Pace
Publikationsdatum: 26.01.2018
Verlag: Springer US
Erschienen in: Theory and Decision / Ausgabe 2/2018
Print ISSN: 0040-5833
Elektronische ISSN: 1573-7187
DOI: https://doi.org/10.1007/s11238-018-9653-0

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