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Speed, Accuracy, and the Optimal Timing of Choices

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  • Drew Fudenberg
  • Philipp Strack
  • Tomasz Strzalecki

Abstract

We model the joint distribution of choice probabilities and decision times in binary decisions as the solution to a problem of optimal sequential sampling, where the agent is uncertain of the utility of each action and pays a constant cost per unit time for gathering information. We show that choices are more likely to be correct when the agent chooses to decide quickly provided that the agent?s prior beliefs are correct. This better matches the observed correlation between decision time and choice probability than does the classical drift-diffusion model, where the agent knows the utility difference between the choices.

Suggested Citation

  • Drew Fudenberg & Philipp Strack & Tomasz Strzalecki, 2015. "Speed, Accuracy, and the Optimal Timing of Choices," Working Paper 254346, Harvard University OpenScholar.
  • Handle: RePEc:qsh:wpaper:254346
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    File URL: http://scholar.harvard.edu/tomasz/node/254346
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    Cited by:

    1. Jakub Steiner & Colin Stewart & Filip Matějka, 2017. "Rational Inattention Dynamics: Inertia and Delay in Decision‐Making," Econometrica, Econometric Society, vol. 85, pages 521-553, March.
    2. Mira Frick & Ryota Iijima & Tomasz Strzalecki, 2017. "Dynamic Random Utility," Cowles Foundation Discussion Papers 2092, Cowles Foundation for Research in Economics, Yale University.
    3. Xavier Gabaix, 2017. "Behavioral Inattention," NBER Working Papers 24096, National Bureau of Economic Research, Inc.
    4. Larry G. Epstein & Shaolin Ji, 2017. "Optimal Learning and Ellsberg’s Urns," Boston University - Department of Economics - Working Papers Series WP2017-010, Boston University - Department of Economics.
    5. Fudenberg, Drew & Romanyuk, Gleb & Strack, Philipp, 2017. "Active learning with a misspecified prior," Theoretical Economics, Econometric Society, vol. 12(3), September.
    6. Arkady Konovalov & Ian Krajbich, 2016. "Revealed Indifference: Using Response Times to Infer Preferences," Working Papers 16-01, Ohio State University, Department of Economics.
    7. D. Pennesi, 2016. "Deciding fast and slow," Working Papers wp1082, Dipartimento Scienze Economiche, Universita' di Bologna.
    8. Larry G. Epstein & Shaolin Ji, 2017. "Optimal Learning under Robustness and Time-Consistency," Papers 1708.01890, arXiv.org, revised Mar 2019.
    9. Huseynov, Samir & Krajbich, Ian & Palma, Marco A., 2018. "No Time to Think: Food Decision-Making under Time Pressure," 2018 Annual Meeting, August 5-7, Washington, D.C. 274135, Agricultural and Applied Economics Association.
    10. S. Cerreia-Vioglio & F. Maccheroni & M. Marinacci & A. Rustichini, 2017. "Multinomial logit processes and preference discovery: inside and outside the black box," Working Papers 615, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

    More about this item

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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