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An experiment on case-based decision making

Author

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  • Brit Grosskopf

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  • Rajiv Sarin
  • Elizabeth Watson

Abstract

We experimentally investigate the disposition of decision makers to use case-based reasoning as suggested by Hume (An enquiry concerning human understanding, 1748 ) and formalized by case-based decision theory (Gilboa and Schmeidler in Q J Econ 110:605–639, 1995 ). Our subjects face a monopoly decision problem about which they have very limited information. Information is presented in a manner which makes similarity judgements according to the feature matching model of Tversky (Psychol Rev 84:327–352, 1977 ) plausible. We provide subjects a “history” of cases. In the $$2\times 2$$ 2 × 2 between-subject design, we vary whether information about the current market is given and whether immediate feedback about obtained profits is provided. The results provide support for the predictions of case-based decision theory, particularly when no immediate feedback is provided. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Brit Grosskopf & Rajiv Sarin & Elizabeth Watson, 2015. "An experiment on case-based decision making," Theory and Decision, Springer, vol. 79(4), pages 639-666, December.
  • Handle: RePEc:kap:theord:v:79:y:2015:i:4:p:639-666
    DOI: 10.1007/s11238-015-9492-1
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    File URL: http://hdl.handle.net/10.1007/s11238-015-9492-1
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    References listed on IDEAS

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    1. Itzhak Gilboa & David Schmeidler, 1995. "Case-Based Decision Theory," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 605-639.
    2. Gayer Gabrielle & Gilboa Itzhak & Lieberman Offer, 2007. "Rule-Based and Case-Based Reasoning in Housing Prices," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-37, April.
    3. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
    4. Wolfgang Ossadnik & Dirk Wilmsmann & Benedikt Niemann, 2013. "Experimental evidence on case-based decision theory," Theory and Decision, Springer, vol. 75(2), pages 211-232, August.
    5. Rajiv Sarin & Farshid Vahid, 2004. "Strategy Similarity and Coordination," Economic Journal, Royal Economic Society, vol. 114(497), pages 506-527, July.
    6. Itzhak Gilboa & Offer Lieberman & David Schmeidler, 2006. "Empirical Similarity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 433-444, August.
    7. Matsui, Akihiko, 2000. "Expected utility and case-based reasoning," Mathematical Social Sciences, Elsevier, vol. 39(1), pages 1-12, January.
    8. Itzhak Gilboa & David Schmeidler, 1996. "Act similarity in case-based decision theory (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(1), pages 47-62.
    9. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, Oxford University Press, vol. 69(1), pages 99-118.
    10. repec:kap:expeco:v:1:y:1998:i:1:p:43-62 is not listed on IDEAS
    11. Rubinstein, Ariel, 1988. "Similarity and decision-making under risk (is there a utility theory resolution to the Allais paradox?)," Journal of Economic Theory, Elsevier, vol. 46(1), pages 145-153, October.
    12. Reinhard Selten, 1998. "Axiomatic Characterization of the Quadratic Scoring Rule," Experimental Economics, Springer;Economic Science Association, vol. 1(1), pages 43-61, June.
    13. Sarin, Rajiv & Vahid, Farshid, 1999. "Payoff Assessments without Probabilities: A Simple Dynamic Model of Choice," Games and Economic Behavior, Elsevier, vol. 28(2), pages 294-309, August.
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    Cited by:

    1. Mengel, Friederike & Sciubba, Emanuela, 2010. "Extrapolation in Games of Coordination and Dominance Solvable Games," Sustainable Development Papers 98475, Fondazione Eni Enrico Mattei (FEEM).
    2. Roxane Bricet, 2018. "Precise versus imprecise datasets: revisiting ambiguity attitudes in the Ellsberg paradox," THEMA Working Papers 2018-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    3. repec:kap:jrisku:v:59:y:2019:i:1:d:10.1007_s11166-019-09309-1 is not listed on IDEAS
    4. Han Bleichrodt & Martin Filko & Amit Kothiyal & Peter P. Wakker, 2017. "Making Case-Based Decision Theory Directly Observable," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 123-151, February.
    5. Benjamin Radoc & Robert Sugden & Theodore L. Turocy, 2019. "Correlation neglect and case-based decisions," Journal of Risk and Uncertainty, Springer, vol. 59(1), pages 23-49, August.

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