Abstract:I address an overlooked question about the structure of the cognitive/conative model of the mind that underlies much of the work in economics, psychology and philosophy: namely, whether conative states are fundamentally monistic (desire-like) or comparative (preference-like). I argue that two seemingly promising sets of theoretical considerations – namely, the structure of Rational Choice Theory, and considerations of computational efficiency – are unable to resolve this debate. Given this, I suggest that a consideration that speaks in favour of the preference-based (...) view is the fact that it makes it easier to explain certain empirically observed patterns in decision making. (shrink)

People often face preferential decisions under risk. To further our understanding of the cognitive processes underlying these preferential choices, two prominent cognitive models, decision field theory (DFT; Busemeyer & Townsend, 1993) and the proportional difference model (PD; González‐Vallejo, 2002), were rigorously tested against each other. In two consecutive experiments, the participants repeatedly had to choose between monetary gambles. The first experiment provided the reference to estimate the models’ free parameters. From these estimations, new gamble pairs were generated for the second (...) experiment such that the two models made maximally divergent predictions. In the first experiment, both models explained the data equally well. However, in the second generalization experiment, the participants’ choices were much closer to the predictions of DFT. The results indicate that the stochastic process assumed by DFT, in which evidence in favor of or against each option accumulates over time, described people’s choice behavior better than the trade‐offs between proportional differences assumed by PD. (shrink)

The study of decision making has traditionally been dominated by axiomatic utility theories. More recently, an alternative approach, which focuses on the micro-mechanisms of the underlying deliberation process, has been shown to account for several "paradoxes" in human choice behavior for which simple utility-based approaches cannot. Decision field theory (DFT) is a cognitive-dynamical model of decision making and preferential choice, built on the fundamental principle that decisions are based on the accumulation of subjective evaluations of choice alternatives until a threshold (...) criterion is met. This article extends the basic DFT framework to the domain of dynamic decision making. DFT-Dynamic is proposed as a new alternative to normative backward induction. Through its attention to the processes underlying planning and deliberation DFT-D provides simple, emergent explanations for violations of choice principles traditionally taken as evidence of irrationality. A recent multistage decision making study is used to showcase the model's efficacy for developing cognitive models of individual strategies. (shrink)

This article investigates how subjects determine minimum selling prices for lotteries. We design an experiment where subjects have at every moment an incentive to state their minimum selling price and to adjust the price, if they believe that the price that they stated initially was not optimal. We observe frequent and sizeable price adjustments. We find that random pricing models cannot explain the observed price patterns. We show that earlier prices contain information about future price adjustments. We propose a model (...) of Stochastic Pricing that offers an intuitive explanation for these price adjustment patterns. (shrink)

Third generation prospect theory is a theory of choices and of judgments of highest buying and lowest selling prices of risky prospects, i.e., of willingness to pay and willingness to accept. The gap between WTP and WTA is sometimes called the “endowment effect” and was previously called the “point of view” effect. Third generation prospect theory combines cumulative prospect theory for risky prospects with the theory that judged values are based on the integration of price paid or price received with (...) the consequences of gambles. In TGPT, the discrepancy between WTP and WTA is due to loss aversion-losses have greater absolute utility than gains of the same value. TGPT was developed independently of similar developments by Birnbaum and Zimmermann :145–187, 1998) and Luce. This paper reviews theoretical and empirical findings, to show that TGPT fails as a descriptive model of both choices and judgments. Evidence refutes three implications of TGPT, but they are consistent with configural weight models in which loss aversion is not needed to describe the results. In the configural weight models, buyers place greater weight on lower consequences, attributes or estimates of value compared to sellers, who place greater configural weight on higher aspects of an object or prospect. (shrink)

ABSTRACTHigh-level judgement and decision-making tasks display dynamic bidirectional relationships in which salient cues determine how responses are evaluated by decision-makers, and these responses in turn determine the cues that are considered. In this paper, we propose Kosko's bidirectional associative memory network, a minimal two-layer recurrent neural network, as a mathematically tractable toy model with which the properties of existing bidirectional models, and the behavioural implications of these properties, can be studied. We first derive results regarding the dynamics of the BAM (...) network, and then show how these results can be used to provide an analytically sound explanation for a number of important findings, including coherence shifts in judgement and choice, anchoring effects, and reference point effects. (shrink)