TY - JOUR
T1 - The gradual nature of economic errors
AU - Alós-Ferrer, Carlos
AU - Garagnani, Michele
N1 - Funding Information:
The authors thank José Apesteguía, Larbi Alaoui, Miguel Ballester, Sudeep Bhatia, Michael Birnbaum, Andrew Caplin, Nick Chater, Giorgio Coricelli, Ernst Fehr, Fabio Maccheroni, Paola Manzini, Paulo Natenzon, Nick Netzer, Antonio Penta, Antonio Rangel, Aldo Rustichini, Michael Woodford, and seminar audiences at the TIBER Symposium (Tilburg, 2018), the Conference on Decision Sciences (Konstanz, 2018), the Workshop on Stochastic Choice (Barcelona, 2019), the Sloan-Nomis Workshop on the Cognitive Foundations of Economic Behavior (Vitznau, 2019), as well as the SAET (Ischia, 2019), AISC (Lucca, 2019), and IAREP (Dublin, 2019) conferences, and a plenary session at the 3rd ACBES Conference (Hanoi, 2021). Financial support from the German Science Foundation (DFG), research unit “PsychoEconomics” (FOR 1882), project Al-1169/4, is gratefully acknowledged.
Funding Information:
☆ The authors thank José Apesteguía, Larbi Alaoui, Miguel Ballester, Sudeep Bhatia, Michael Birnbaum, Andrew Caplin, Nick Chater, Giorgio Coricelli, Ernst Fehr, Fabio Maccheroni, Paola Manzini, Paulo Natenzon, Nick Netzer, Antonio Penta, Antonio Rangel, Aldo Rustichini, Michael Woodford, and seminar audiences at the TIBER Symposium (Tilburg, 2018), the Conference on Decision Sciences (Konstanz, 2018), the Workshop on Stochastic Choice (Barcelona, 2019), the Sloan-Nomis Workshop on the Cognitive Foundations of Economic Behavior (Vitznau, 2019), as well as the SAET (Ischia, 2019), AISC (Lucca, 2019), and IAREP (Dublin, 2019) conferences, and a plenary session at the 3rd ACBES Conference (Hanoi, 2021). Financial support from the German Science Foundation (DFG), research unit “PsychoEconomics” (FOR 1882), project Al-1169/4, is gratefully acknowledged.
Publisher Copyright:
© 2022 The Author(s)
PY - 2022/8
Y1 - 2022/8
N2 - Overwhelming evidence from the cognitive sciences shows that, in simple discrimination tasks (determining what is louder, longer, brighter, or even which number is larger) humans make more mistakes and decide more slowly when the stimuli are closer along the relevant scale. We investigate to what extent these effects are relevant for economic decisions in a setting where optimal choices are objectively known (and independent of attitudes toward risk). We find that, even for tasks with objectively-correct answers, error rates and response times increase gradually as expected values become closer. Differences in payoff-independent numerical magnitudes also play a role, which however only becomes clear when one accounts for expected values. We conclude that the gradual effects on choice found in cognitive discrimination paradigms are very much present in economic choices, and depend on economic as well as perceptual variables.
AB - Overwhelming evidence from the cognitive sciences shows that, in simple discrimination tasks (determining what is louder, longer, brighter, or even which number is larger) humans make more mistakes and decide more slowly when the stimuli are closer along the relevant scale. We investigate to what extent these effects are relevant for economic decisions in a setting where optimal choices are objectively known (and independent of attitudes toward risk). We find that, even for tasks with objectively-correct answers, error rates and response times increase gradually as expected values become closer. Differences in payoff-independent numerical magnitudes also play a role, which however only becomes clear when one accounts for expected values. We conclude that the gradual effects on choice found in cognitive discrimination paradigms are very much present in economic choices, and depend on economic as well as perceptual variables.
KW - Decision errors
KW - Stochastic choice
KW - Strength of preference
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U2 - 10.1016/j.jebo.2022.05.015
DO - 10.1016/j.jebo.2022.05.015
M3 - Article
AN - SCOPUS:85131383492
SN - 0167-2681
VL - 200
SP - 55
EP - 66
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
ER -