Principal Investigator: Carlos Alós-Ferrer
Research Team: Alexander Ritschel, Christoph Justen
We consider a dual-process framework for decision making under uncertainty, contrasting “economic rationality” with a specific family of behavioural rules. The basic rational paradigm, which one would like to identify with a controlled/reflective decision process, leads to optimization behaviour based on Bayesian updating of beliefs. We contrast this with the human tendency to rely on past performance as an indicator of future outcomes. This tendency gives rise to behavioural rules characterized by an increased propensity to adopt actions associated with higher observed payoffs. Examples are reinforcement (based on own payoffs) and imitation (based on other agents’ payoffs). Recent research in social cognition and neuroscience has shown that the associated, belief-free decision processes bear all the marks of automatic/impulsive processes.Our previous work has shown that a dual process paradigm is appropriate for the description of human behaviour in a belief updating paradigm. This project will build and expand on these initial studies, making use of techniques from psychology (response times, cognitive load, etc.) in paradigms from economics to better understand the automatic character of boundedly rational behavioural phenomena. We will consider both individual tasks and interpersonal, strategic paradigms (games).