Citation
F. Lieder, M. Hsu, T. L. Griffiths. "The High Availability of Extreme Events Serves Resource-Rational Decision-Making". Annual Conference of the Cognitive Science Society, 2014.

Abstract
Extreme events come to mind very easily and people overestimate their probability and overweight them in decisionmaking. In this paper we show that rational use of limited cognitive resources can generate these ’availability biases.’ We hypothesize that availability helps people to quickly make good decisions in very risky situations. Our analysis shows that agents who decide by simulating a finite number of possible outcomes (sampling) should over-sample outcomes with extreme utility. We derive a cognitive strategy with connections to fast-and-frugal heuristics, and we experimentally confirm its prediction that an event’s extremity increases the factor by which people overestimate its frequency. Our model also explains three context effects in decision-making under risk: framing effects, the Allais paradox, and preference reversals.

Electronic downloads

• http://cocosci.berkeley.edu/falk/HighAvailabilityOfExtremeEvents.pdf

• HTML

  F. Lieder, M. Hsu, T. L. Griffiths. <a
  href="http://robotics.eecs.berkeley.edu/pubs/13.html"
  >The High Availability of Extreme Events Serves
  Resource-Rational Decision-Making</a>, Annual
  Conference of the Cognitive Science Society, 2014.

• Plain text

  F. Lieder, M. Hsu, T. L. Griffiths. "The High
  Availability of Extreme Events Serves Resource-Rational
  Decision-Making". Annual Conference of the Cognitive
  Science Society, 2014.

• BibTeX

  @inproceedings{LiederHsuGriffiths14_HighAvailabilityOfExtremeEventsServesResourceRational,
      author = {F. Lieder and M. Hsu and T. L. Griffiths},
      title = {The High Availability of Extreme Events Serves
                Resource-Rational Decision-Making},
      booktitle = {Annual Conference of the Cognitive Science Society},
      year = {2014},
      abstract = {Extreme events come to mind very easily and people
                overestimate their probability and overweight them
                in decisionmaking. In this paper we show that
                rational use of limited cognitive resources can
                generate these ’availability biases.’ We
                hypothesize that availability helps people to
                quickly make good decisions in very risky
                situations. Our analysis shows that agents who
                decide by simulating a finite number of possible
                outcomes (sampling) should over-sample outcomes
                with extreme utility. We derive a cognitive
                strategy with connections to fast-and-frugal
                heuristics, and we experimentally confirm its
                prediction that an event’s extremity increases
                the factor by which people overestimate its
                frequency. Our model also explains three context
                effects in decision-making under risk: framing
                effects, the Allais paradox, and preference
                reversals.},
      URL = {http://robotics.eecs.berkeley.edu/pubs/13.html}
  }
  

Posted by Ehsan Elhamifar on 30 May 2014.
Groups: ehumans
For additional information, see the Publications FAQ or contact webmaster at robotics eecs berkeley edu.