A model of decision making in an ecologically realistic environment: Relative comparison and the Independence of Irrelevant Alternatives
Models of behavior in a variety of areas often assume that decision-makers will adhere to the axioms of economic rationality. This requires that outcomes can be assigned objective values by stable evaluation frameworks. Yet both human and animal behavior is often not economically rational. Instead relative comparison of options is often used to assess value. We are interested in conditions that might lead natural selection to favor relative comparison of options over behavior that is consistent with the axioms of rationality. We compare an economically rational strategy with a relative comparison strategy (trade-off contrast). We model these strategies in a simple environment where decisions are multi-period; there is stochastic fluctuation in the choices available at any given time; and uncertainty about what choices will be available in the future. We investigate five levels of interaction between the attributes of the options that range from perfect complementarity to perfect substitutability. Our results show that, for some of the parameter space, a non-rational strategy achieved higher fitness than an economically rational strategy and that these differences were large enough to be biologically significant. Copyright Springer Science+Business Media, LLC. 2012
Volume (Year): 14 (2012)
Issue (Month): 3 (October)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/environmental/journal/10818/PS2|
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.:
- Cosmides, Leda & Tooby, John, 1994. "Better than Rational: Evolutionary Psychology and the Invisible Hand," American Economic Review, American Economic Association, vol. 84(2), pages 327-332, May.
- Arthur J. Robson, 2002. "Evolution and Human Nature," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 89-106, Spring.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-291, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
- Smith, Vernon L., 2002. "Constructivist and Ecological Rationality in Economics," Nobel Prize in Economics documents 2002-7, Nobel Prize Committee.
- Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
- M. Keith Chen & Venkat Lakshminarayanan & Laurie R. Santos, 2006. "How Basic Are Behavioral Biases? Evidence from Capuchin Monkey Trading Behavior," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 517-537, June.
- Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 1039-1061.
- Waldman, Michael, 1994. "Systematic Errors and the Theory of Natural Selection," American Economic Review, American Economic Association, vol. 84(3), pages 482-497, June.
- Konstantinos Katsikopoulos & Gerd Gigerenzer, 2008. "One-reason decision-making: Modeling violations of expected utility theory," Journal of Risk and Uncertainty, Springer, vol. 37(1), pages 35-56, August.
- Robson, Arthur J., 1996. "A Biological Basis for Expected and Non-expected Utility," Journal of Economic Theory, Elsevier, vol. 68(2), pages 397-424, February.
- Amos Tversky & Itamar Simonson, 1993. "Context-Dependent Preferences," Management Science, INFORMS, vol. 39(10), pages 1179-1189, October.
- Arthur J. Robson, 2001. "The Biological Basis of Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 39(1), pages 11-33, March. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:kap:jbioec:v:14:y:2012:i:3:p:197-215. 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: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.