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Irrational time allocation in decision-making


Oud, Bastiaan; Krajbich, Ian Michael; Miller, Kevin; Cheong, Jin Hyun; Botvinick, Matthew; Fehr, Ernst (2016). Irrational time allocation in decision-making. Proceedings of the Royal Society of London, Series B: Biological Sciences, 283(1822):20151439.

Abstract

Time is an extremely valuable resource but little is known about the efficiency of time allocation in decision-making. Empirical evidence suggests that in many ecologically relevant situations, decision difficulty and the relative
reward from making a correct choice, compared to an incorrect one, are inversely linked, implying that it is optimal to use relatively less time for difficult choice problems. This applies, in particular, to value-based choices, in which the relative reward from choosing the higher valued item shrinks as the values of the other options get closer to the best option and are thus more
difficult to discriminate. Here, we experimentally show that people behave sub-optimally in such contexts. They do not respond to incentives that favour the allocation of time to choice problems in which the relative reward for choosing the best option is high; instead they spend too much time on problems in which the reward difference between the options is low. We demonstrate this by showing that it is possible to improve subjects’ time allocation with a simple intervention that cuts them off when their
decisions take too long. Thus, we provide a novel form of evidence that organisms systematically spend their valuable time in an inefficient way, and simultaneously offer a potential solution to the problem.

Abstract

Time is an extremely valuable resource but little is known about the efficiency of time allocation in decision-making. Empirical evidence suggests that in many ecologically relevant situations, decision difficulty and the relative
reward from making a correct choice, compared to an incorrect one, are inversely linked, implying that it is optimal to use relatively less time for difficult choice problems. This applies, in particular, to value-based choices, in which the relative reward from choosing the higher valued item shrinks as the values of the other options get closer to the best option and are thus more
difficult to discriminate. Here, we experimentally show that people behave sub-optimally in such contexts. They do not respond to incentives that favour the allocation of time to choice problems in which the relative reward for choosing the best option is high; instead they spend too much time on problems in which the reward difference between the options is low. We demonstrate this by showing that it is possible to improve subjects’ time allocation with a simple intervention that cuts them off when their
decisions take too long. Thus, we provide a novel form of evidence that organisms systematically spend their valuable time in an inefficient way, and simultaneously offer a potential solution to the problem.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Decision-making, speed-accuracy trade-off, neuroeconomics, sequential-sampling model, evidence accumulation, optimality
Language:English
Date:January 2016
Deposited On:05 Feb 2016 10:22
Last Modified:08 Dec 2017 17:46
Publisher:Royal Society Publishing
ISSN:0962-8452
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1098/rspb.2015.1439

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