The psychological mechanisms underpinning experience-based choice

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Copyright: Camilleri, Adrian
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Abstract
Most decisions occur in the context of uncertainty. Usually we do not possess explicit knowledge of all the outcomes and their associated probabilities; instead, we must estimate this outcome distribution information from our own personal experience with similar past situations. The primary goal motivating the work contained within was to reveal the psychological mechanisms underlying such experience-based choices. The phenomenon inspiring this goal was the observation that preferences tend to reverse depending on whether information about alternative outcome distributions is learnt from a summary description or from the experience of sequentially sampling outcomes. In the first experimental chapter it is argued that much of this description-experience “gap” can be attributed to non-representative samples serving as the basis of experience-based choice. Such non-representative samples can occur externally – because of frugal sampling efforts – and internally – because of limited cognitive resources. Both of these sources of bias have the effect of under-representing rare events. However, as discussed in the second experimental chapter, these explanations are sufficient only when costless sampling is followed by a single choice. In contrast, the gap remains in situations where each of many samples is a repeated, consequential choice. It is argued that the sequential nature of these repeated choices induces a short horizon and heavy reliance on recent outcomes. The final experimental chapter demonstrates that decision-makers appear to integrate their experience in such a way as to overestimate rare events and under estimate common events. It is argued that this judgment error reflects the processes of a noisy, instance-based memory system. The system is mechanised in a new and successful model of experience-based choice: the exemplar-confusion model. It is concluded that description- and experience-based choice formats lie along a continuum of uncertainty and share important core features, including the explicit representation of probability, the combining of this probability information with outcome information, and utility maximization. The implication of this conclusion is that the differences between description- and experience-based choices emerge from how uncertainty information is acquired, rather than how it is represented or used.
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Author(s)
Camilleri, Adrian
Supervisor(s)
Newell, Ben
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Publication Year
2011
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Thesis
Degree Type
PhD Doctorate
UNSW Faculty
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