Replicated alternatives and the role of confusion, chasing, and regret in decisions from experience

Eyal Ert; Ido Erev

doi:10.1002/bdm.556

journal article Jan 02, 2007

Replicated alternatives and the role of confusion, chasing, and regret in decisions from experience

Eyal Ert Ido Erev

Journal of Behavioral Decision Making Vol. 20 No. 3 pp. 305-322 · Wiley

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Abstract

AbstractThe current paper explores choice among alternatives that can be classified into distinct classes. All the members of a particular class were ‘replicated alternatives’: they promised the same payoff distribution. Information to decision makers was limited to feedback concerning the realized (obtained and foregone) payoffs. Experiment 1 demonstrates that increasing the number of replicated alternatives creates confusion (which facilitates random choice) and changes the implications of the tendency to chase recent returns (i.e., select the alternative with the best recent outcomes). This effect, termed ‘confused chasing,’ facilitates risk seeking even when this behavior impairs expected earnings. Experiment 2 reveals that increasing the number of replicated alternatives can reduce (but does not eliminate) the tendency to underweight rare events. Experiment 3 shows that the relative importance of chasing and confusion is sensitive to the likelihood of realizing lower payoffs than the forgone payoffs. The main results are summarized with a simple model assuming that payoff sensitivity decreases with experienced regret. Copyright © 2006 John Wiley & Sons, Ltd.

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Details

Published: Jan 02, 2007
Vol/Issue: 20(3)
Pages: 305-322
License: View

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Cite This Article

Eyal Ert, Ido Erev (2007). Replicated alternatives and the role of confusion, chasing, and regret in decisions from experience. Journal of Behavioral Decision Making, 20(3), 305-322. https://doi.org/10.1002/bdm.556

Replicated alternatives and the role of confusion, chasing, and regret in decisions from experience

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