Advanced Search
MyIDEAS: Login

Strategies in dynamic decision making - An experimental investigation of the rationality of decision behaviour

Contents:

Author Info

  • Hey, John D.
  • Knoll, Julia A.

Abstract

This paper is concerned with the question of how people tackle dynamic decision problems. It is on the interface between economics and psychology. Economic theory has a well-defined theory of how people should tackle such problems, but experimental evidence suggests that these are not empirically valid, and particularly that people find dynamic decision problems complex and cognitively demanding. Psychologists have long been aware of such issues and have developed a suite of theories to explain behaviour in such contexts, but these have been largely developed in a static context. This paper attempts to build a bridge between the two disciplines by exploring decision processes in a dynamic problem for which economic theory provides clear predictions. To aid us in this quest we use an experimental design which enables us to infer the decision rules that people are using. We identify a number of distinct decision heuristics, which could usefully be embodied into economic models of dynamic decision making.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0167487011000262
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 32 (2011)
Issue (Month): 3 (June)
Pages: 399-409

as in new window
Handle: RePEc:eee:joepsy:v:32:y:2011:i:3:p:399-409

Contact details of provider:
Web page: http://www.elsevier.com/locate/joep

Related research

Keywords: Dynamic decision making Strategy method Backward induction Heuristics;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bettman, James R. & Johnson, Eric J. & Payne, John W., 1990. "A componential analysis of cognitive effort in choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 45(1), pages 111-139, February.
  2. Müller, Wieland, 1999. "Strategies, heuristics and the relevance of risk aversion in a dynamic decision problem," SFB 373 Discussion Papers 1999,61, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  3. Johnson, Eric J. & Camerer, Colin & Sen, Sankar & Rymon, Talia, 2002. "Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining," Journal of Economic Theory, Elsevier, vol. 104(1), pages 16-47, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Amit Kothiyal & Vitalie Spinu & Peter Wakker, 2014. "An experimental test of prospect theory for predicting choice under ambiguity," Journal of Risk and Uncertainty, Springer, vol. 48(1), pages 1-17, February.
  2. Enrica Carbone & Gerardo Infante, 2012. "The Effect of a Short Planning Horizon on Intertemporal Consumption Choices," Labsi Experimental Economics Laboratory University of Siena 043, University of Siena.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:32:y:2011:i:3:p:399-409. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.