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Contemplation vs. Intuition. A reinforcement learning approach

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Abstract

In a search for a positive model of decision-making with observable primitives, we rely on the burgeoning literature in cognitive neuroscience to construct a three-element machine (agent). Its control unit initiates either impulsive or cognitive element to solve a problem in a stationary Markov environment, the element "chosen" depends on whether the problem is mundane or novel, memory of past successes and the strength of inhibition. Our predictions are based on a stationary asymptotic distribution of the memory, which, depending on the parameters, can generate different "characters", e.g., an uptight dimwit, who could succeed more often with less inhibition, as well as a relaxed wise-guy, who could gain more with a stronger inhibition of impulsive (intuitive) responses. As one would expect, stronger inhibition and lower cognitive costs increase the frequency of decisions made by the cognitive element. More surprisingly, increasing the "carrot" and reducing the "stick" (being in a more supportive environment) enhances contemplative decisions (made by the cognitive unit) for an alert agent, i.e., the one who identifies novel problems frequently enough.

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  • CHO, IN-KOO & Rubinchik, Anna, "undated". "Contemplation vs. Intuition. A reinforcement learning approach," Working Papers WP2015/3, University of Haifa, Department of Economics.
  • Handle: RePEc:haf:huedwp:wp201503
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    1. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521802345, December.
    2. Sims, Christopher A., 2010. "Rational Inattention and Monetary Economics," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.),Handbook of Monetary Economics, edition 1, volume 3, chapter 4, pages 155-181, Elsevier.
    3. Alos Ferrer, Carlos, 2013. "Think, but Not Too Much: A Dual-Process Model of Willpower and Self-Control," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80019, Verein für Socialpolitik / German Economic Association.
    4. Michael Woodford, 2012. "Prospect Theory as Efficient Perceptual Distortion," American Economic Review, American Economic Association, vol. 102(3), pages 41-46, May.
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    More about this item

    Keywords

    the two-system decision-making; executive control; inhibition; adaptive learning; stochastic approximation;

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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