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Randomization

In: A Theory of Dynamic Preferences

Author

Listed:
  • Christo A. Pirinsky

    (University of Central Florida, Business Administration and Finance)

Abstract

This chapter introduces randomization as an exploration mechanism. It refers to the act or process of selecting objects or actions in a random way. By definition, a random choice cannot be an exploitation, i.e., it will always have an element of exploration. Randomization is contrasted with directed exploration, or the act of selecting actions based on their perceived net benefits. Randomization has important advantages compared to directed exploration. It takes less time and effort; it is also less vulnerable to influence. Operationalizing randomization, however, is not trivial. Traditional approaches (e.g., coin flipping) and modern mechanisms (e.g., random number generators) are not easily applicable in everyday life situations. The chapter argues that robust behavioral patterns could be rationalized as effective means for the promotion of exploration through randomization. It analyzes three such patterns introducing random elements into individual decisions: context-dependent choice, self-sabotaging behavior, and divination.

Suggested Citation

  • Christo A. Pirinsky, 2026. "Randomization," Springer Books, in: A Theory of Dynamic Preferences, chapter 5, pages 73-91, Springer.
    • Handle: RePEc:spr:sprchp:978-3-032-13334-2_5
    DOI: 10.1007/978-3-032-13334-2_5
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