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Aiming to choose correctly or to choose wisely? The optimality-accuracy trade-off in decisions under uncertainty

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  • Thomas Garcia

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Sébastien Massoni

    (QuBE - School of Economics and Finance, Queensland University of Technology, Australian Centre for Entrepreneurship Research)

Abstract

When making a decision under uncertainty, individuals aim to achieve opti-mality. In general, an accurate decision is optimal. However, in real life situations asymmetric stakes induce an unusual divergence between optimality and accuracy. We highlight this optimality-accuracy trade-off and study its origins using two experiments on perceptual decision making. We use Signal Detection Theory as a normative benchmark. The first experiment confirms the existence of an optimality-accuracy trade-off with a leading role of accuracy. The second experiment explains this trade-off by the concern of people for being right. Abstract When making a decision under uncertainty, individuals aim to make the best

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  • Thomas Garcia & Sébastien Massoni, 2017. "Aiming to choose correctly or to choose wisely? The optimality-accuracy trade-off in decisions under uncertainty," Working Papers halshs-01631540, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01631540
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01631540
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    More about this item

    Keywords

    Optimality; accuracy; signal detection theory; incentives; experiment;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • Y8 - Miscellaneous Categories - - Related Disciplines

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