The High Availability of Extreme Events Serves Resource-Rational Decision-Making
F. Lieder, M. Hsu, T. L. Griffiths

Citation
F. Lieder, M. Hsu, T. L. Griffiths. "The High Availability of Extreme Events Serves Resource-Rational Decision-Making". Annual Conference of the Cognitive Science Society, 2014.

Abstract
Extreme events come to mind very easily and people overestimate their probability and overweight them in decisionmaking. In this paper we show that rational use of limited cognitive resources can generate these ’availability biases.’ We hypothesize that availability helps people to quickly make good decisions in very risky situations. Our analysis shows that agents who decide by simulating a finite number of possible outcomes (sampling) should over-sample outcomes with extreme utility. We derive a cognitive strategy with connections to fast-and-frugal heuristics, and we experimentally confirm its prediction that an event’s extremity increases the factor by which people overestimate its frequency. Our model also explains three context effects in decision-making under risk: framing effects, the Allais paradox, and preference reversals.

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  • HTML
    F. Lieder, M. Hsu, T. L. Griffiths. <a
    href="http://robotics.eecs.berkeley.edu/pubs/13.html"
    >The High Availability of Extreme Events Serves
    Resource-Rational Decision-Making</a>, Annual
    Conference of the Cognitive Science Society, 2014.
  • Plain text
    F. Lieder, M. Hsu, T. L. Griffiths. "The High
    Availability of Extreme Events Serves Resource-Rational
    Decision-Making". Annual Conference of the Cognitive
    Science Society, 2014.
  • BibTeX
    @inproceedings{LiederHsuGriffiths14_HighAvailabilityOfExtremeEventsServesResourceRational,
        author = {F. Lieder and M. Hsu and T. L. Griffiths},
        title = {The High Availability of Extreme Events Serves
                  Resource-Rational Decision-Making},
        booktitle = {Annual Conference of the Cognitive Science Society},
        year = {2014},
        abstract = {Extreme events come to mind very easily and people
                  overestimate their probability and overweight them
                  in decisionmaking. In this paper we show that
                  rational use of limited cognitive resources can
                  generate these âavailability biases.â We
                  hypothesize that availability helps people to
                  quickly make good decisions in very risky
                  situations. Our analysis shows that agents who
                  decide by simulating a finite number of possible
                  outcomes (sampling) should over-sample outcomes
                  with extreme utility. We derive a cognitive
                  strategy with connections to fast-and-frugal
                  heuristics, and we experimentally confirm its
                  prediction that an eventâs extremity increases
                  the factor by which people overestimate its
                  frequency. Our model also explains three context
                  effects in decision-making under risk: framing
                  effects, the Allais paradox, and preference
                  reversals.},
        URL = {http://robotics.eecs.berkeley.edu/pubs/13.html}
    }
    

Posted by Ehsan Elhamifar on 30 May 2014.
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