IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

On the relative importance of the hot stove effect and the tendency to rely on small samples

  • Takemi Fujikawa

Experiments have suggested that decisions from \textit{experience} differ from decisions from \textit{description}. In experience-based decisions, the decision makers often fail to maximise their payoffs. Previous authors have ascribed the effect of underweighting of rare outcomes to this deviation from maximisation. In this paper, I re-examine and provide further analysis on the effect with an experiment that involves a series of simple binary choice gambles. In the current experiment, decisions that bear small consequences are repeated hundreds of times, feedback on the consequence of each decision is provided immediately, and decision outcomes are accumulated. The participants have to learn about the outcome distributions through sampling, as they are not explicitly provided with prior information on the payoff structure. The current results suggest that the ``hot stove effect'' is stronger than suggested by previous research and is as important as the payoff variability effect and the effect of underweighting of rare outcomes in analysing decisions from experience in which the features of gambles must be learned through a sampling process.

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://journal.sjdm.org/9521/jdm9521.pdf
Download Restriction: no

File URL: http://journal.sjdm.org/9521/jdm9521.html
Download Restriction: no

Article provided by Society for Judgment and Decision Making in its journal Judgment and Decision Making.

Volume (Year): 4 (2009)
Issue (Month): 5 (August)
Pages: 429-435

as
in new window

Handle: RePEc:jdm:journl:v:4:y:2009:i:5:p:429-435
Contact details of provider:

No references listed on IDEAS
You can help add them by filling out this form.

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

When requesting a correction, please mention this item's handle: RePEc:jdm:journl:v:4:y:2009:i:5:p:429-435. 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: (Jonathan Baron)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.