This paper presents a critical reflection on dynamic consistency as commonly used in economics and decision theory, and on the difficulty to test it experimentally. It distinguishes between the uses of the term dynamic consistency in order to characterize two different properties: the first accounts for the neutrality of individual preferences towards the timing of resolution of uncertainty whereas the second guarantees that a strategy chosen at the beginning of a sequential decision problem is immune to any reevaluation and (...) will effectively be implemented from then on in the decision problem. Although these two properties are equivalent under expected utility, this is not the case under non-EU. Building on the possible characteristics of individual dynamic preferences under risk, this paper proposes a conceptual categorization, that is experimentally testable, of possible sequential decision making behaviors of non-EU maximizers. (shrink)

There are at least two plausible generalisations of subjective expected utility (SEU) theory: cumulative prospect theory (which relaxes the independence axiom) and Levi’s decision theory (which relaxes at least ordering). These theories call for a re-assessment of the minimal requirements of rational choice. Here, I consider how an analysis of sequential decision making contributes to this assessment. I criticise Hammond’s (Economica 44(176):337–350, 1977; Econ Philos 4:292–297, 1988a; Risk, decision and rationality, 1988b; Theory Decis 25:25–78, 1988c) ‘consequentialist’ argument for the (...) SEU preference axioms, but go on to formulate a related diachronic-Dutch-book-style’ argument that better achieves Hammond’s aims. Some deny the importance of Dutch-book sure losses, however, in which case, Seidenfeld’s (Econ Philos 4:267–290, 1988a) argument that distinguishes between theories that relax independence and those that relax ordering is relevant. I unravel Seidenfeld’s argument in light of the various criticisms of it and show that the crux of the argument is somewhat different and much more persuasive than what others have taken it to be; the critical issue is the modelling of future choices between ‘indifferent’ decision-tree branches in the sequential setting. Finally, I consider how Seidenfeld’s conclusions might nonetheless be resisted. (shrink)

The ability to learn sequential contingencies of actions for predicting future outcomes is indispensable for flexible behavior in many daily decision-making contexts. It remains open whether such ability may be enhanced by transcranial direct current stimulation. The present study combined tDCS with functional near-infrared spectroscopy to investigate potential tDCS-induced effects on sequential decision-making and the neural mechanisms underlying such modulations. Offline tDCS and sham stimulation were applied over the left and right dorsolateral prefrontal cortex in young male adults (...) in a double-blind between-subject design using a three-state Markov decision task. The results showed an enhanced dlPFC hemodynamic response during the acquisition of sequential state transitions that is consistent with the findings from a previous functional magnetic resonance imaging study; a tDCS-induced increase of the hemodynamic response in the dlPFC, but without accompanying performance-enhancing effects at the behavioral level; and a greater tDCS-induced upregulation of hemodynamic responses in the delayed reward condition that seems to be associated with faster decision speed. Taken together, these findings provide empirical evidence for fNIRS as a suitable method for investigating hemodynamic correlates of sequential decision-making as well as functional brain correlates underlying tDCS-induced modulation. Future research with larger sample sizes for carrying out subgroup analysis is necessary in order to decipher interindividual differences in tDCS-induced effects on sequential decision-making process at the behavioral and brain levels. (shrink)

This paper introduces a hybrid model that unifies connectionist, symbolic, and reinforcement learning into an integrated architecture for bottom-up skill learning in reactive sequential decision tasks. The model is designed for an agent to learn continuously from on-going experience in the world, without the use of preconceived concepts and knowledge. Both procedural skills and high-level knowledge are acquired through an agent’s experience interacting with the world. Computational experiments with the model in two domains are reported.

To deal with reactive sequential decision tasks we present a learning model which is a hybrid connectionist model consisting of both localist and distributed representations based on the two level approach proposed in..

Respect for patient autonomy can apply at two levels: ensuring that patient care reflects their considered values and wishes and honoring patient preferences about how to make momentous decisions. Caregivers who seek to respect patient autonomy in the context of some end-of-life decisions face a dilemma. Because these decisions are fraught, patients may prefer to approach them sequentially, only making decisions at the time they arise. However, respecting patients’ preferences for a sequential approach can increase (...) the likelihood that surrogates and care teams wind up in situations in which they lack information needed to ensure patients receive care that conforms to their considered values after they are no longer competent to make decisions for themselves. Sequential decision-making can thus conflict with the goal of ensuring care reflects the wishes of patients. After illustrating how this dilemma can arise in the use of life-sustaining “bridge” technologies, we argue that care teams may be warranted in requiring patients to articulate their wishes in an advance care plan before treatment begins. In some cases, care teams may even be permitted to refuse to undertake certain courses of care, unless patients articulate their wishes in an advance care plan. (shrink)

We study the wisdom of the crowd in three sequential decision‐making tasks: the Balloon Analogue Risk Task (BART), optimal stopping problems, and bandit problems. We consider a behavior‐based approach, using majority decisions to determine crowd behavior and show that this approach performs poorly in the BART and bandit tasks. The key problem is that the crowd becomes progressively more extreme as the decision sequence progresses, because the diversity of opinion that underlies the wisdom of the crowd is lost. (...) We also consider model‐based approaches to each task. This involves inferring cognitive models for each individual based on their observed behavior, and using these models to predict what each individual would do in any possible task situation. We show that this approach performs robustly well for all three tasks and has the additional advantage of being able to generalize to new problems for which there are no behavioral data. We discuss potential applications of the model‐based approach to real‐world sequential decision problems and discuss how our approach contributes to the understanding of collective intelligence. (shrink)

A growing body of evidence suggests that emotional states under which individuals perform decision-making tasks modulate performance. Studies have mainly reported that negative emotions can differe...

The concept of transformative decision rules provides auseful tool for analyzing what is often referred to as the`framing', or `problem specification', or `editing' phase ofdecision making. In the present study we analyze a fundamentalaspect of transformative decision rules, viz. permutability. A setof transformative decision rules is, roughly put, permutable justin case it does not matter in which order the rules are applied.It is argued that in order to be normatively reasonable, sets oftransformative decision rules have to satisfy a number ofstructural (...) conditions that together imply permutability. Thisformal result gives support to a non-sequential theory of framing,i.e., a theory which prescribes no uniform order in which differentsteps in the framing process have to be performed. (shrink)

Decision theory is a theory of rationality, but the concept of rationality has several different dimensions. Making decision theory more realistic with respect to one dimension may well have the result of making it less realistic in another dimension. This paper illustrates this tension in the context of sequential choice. Trying to make decision theory more realistic by accommodating resoluteness and commitment brings the normative assessment dimension of rationality into conflict with the action-guiding dimension. In the case of resolute (...) choice the conflict comes because of a clash of perspectives. The perspective from which resolute choice seems normatively compelling is not the perspective from which it can serve the purpose of guiding action. (shrink)

In a dynamic (sequential) framework, departures from the independence axiom (IND) are reputed to induce violations of dynamic consistency (DC), which may in turn have undesirable normative consequences. This result thus questions the normative acceptability of non expected-utility (non-EU) models, which precisely relax IND. This paper pursues a twofold objective. The main one is to discuss the normative conclusion: usual arguments linking violations of DC to departures from IND are shown to be actually based on specific (but usually remaining (...) implicit) assumptions which may rightfully be released, so that it is actually possible for a non-EU maximizer to be dynamically consistent and thus avoid normative difficulties. The second objective is to introduce a kind of `reality principle' (through two other evaluation criteria) in order to mitigate the normative requirement when examining adequate moods for non-EU decision making. (shrink)

Causal Decision Theory reckons the choice-worthiness of an option to be completely independent of its evidential bearing on its non-effects. But after one has made a choice this bearing is relevant to future decisions. Therefore it is possible to construct problems of sequential choice in which Causal Decision Theory makes a guaranteed loss. So Causal Decision Theory is wrong. The source of the problem is the idea that agents have a special perspective on their own contemplated actions, from (...) which evidential connections that observers can see are either irrelevant or invisible. (shrink)

This paper presents a novel learning model Clarion , which is a hybrid model based on the two-level approach proposed in Sun (1995). The model integrates neural, reinforcement, and symbolic learning methods to perform on-line, bottom-up learning (i.e., learning that goes from neural to symbolic representations). The model utilizes both procedural and declarative knowledge (in neural and symbolic representations respectively), tapping into the synergy of the two types of processes. It was applied to deal with sequential decision tasks. Experiments (...) and analyses in various ways are reported that shed light on the advantages of the model. (shrink)

In this paper we suggest a model of sequential auctions with endogenous participation where each bidder conjectures about the number of participants at each round. Then, after learning his value, each bidder decides whether or not to participate in the auction. In the calculation of his expected value, each bidder uses his conjectures about the number of participants for each possible subgroup. In equilibrium, the conjectured probability is compatible with the probability of staying in the auction. In our model, (...) players face participation costs, bidders may buy as many objects as they wish and they are allowed to drop out at any round. Bidders can drop out at any time, but they cannot come back to the auction. In particular we can determine the number of participants and expected prices in equilibrium. We show that for any bidding strategy, there exists such a probability of staying in the auction. For the case of stochastically independent objects, we show that in equilibrium every bidder who decides to continue submits a bid that is equal to his value at each round. When objects are stochastically identical, we are able to show that expected prices are decreasing. (shrink)

I model sequential decisions over multiple interconnected propositions and investigate path-dependence in such decisions. The propositions and their interconnections are represented in propositional logic. A sequential decision process is path-dependent if its outcome depends on the order in which the propositions are considered. Assuming that earlier decisions constrain later ones, I prove three main results: First, certain rationality violations by the decision-making agent—individual or group—are necessary and sufficient for path-dependence. Second, under some conditions, path-dependence is (...) unavoidable in decisions made by groups. Third, path-dependence makes decisions vulnerable to strategic agenda setting and strategic voting. I also discuss escape routes from path-dependence. My results are relevant to discussions on collective consistency and reason-based decision-making, focusing not only on outcomes, but also on underlying reasons, beliefs, and constraints. (shrink)

We introduce a new allocation rule, called the sequential equal surplus division for rooted forest TU-games. We provide two axiomatic characterizations for this allocation rule. The first one uses the classical property of component efficiency plus an edge deletion property. The second characterization uses standardness, an edge deletion property applied to specific rooted trees, a consistency property, and an amalgamation property. We also provide an extension of the sequential equal surplus division applied to the problem of sharing a (...) river with bifurcations. (shrink)

We show that an individual using a choice function is sequentially rational and the decisions he makes are independent of the order of implementation of the rationales if and only if he is rational with the union of the rationales as a base binary relation. When he makes his decisions following a choice correspondence, the sufficiency part of this claim still holds, the necessity part of it does not.

According to the Appraisal-Tendency Framework (Han, Lerner, & Keltner, 2007), certainty-associated emotions increase risk taking compared with uncertainty-associated emotions. To date, this general effect has only been shown in static judgement and decision-making paradigms; therefore, the present study tested the effect of certainty on risk taking in a sequential decision-making task. We hypothesised that the effect would be reversed due to the kind of processing involved, as certainty is considered to encourage heuristic processing that takes into account the emotional (...) cues arising from previous decisions, whereas uncertainty leads to more systematic processing. One hundred and one female participants were induced to feel one of three emotions (film clips) before performing a decision-making task involving risk (Game of Dice Task; Brand et al., 2005). As expected, the angry and happy participants (certainty-associated emotions) were more likely than the fearful participants (uncertainty-associated emotion) to make safe decisions (vs. risky decisions). (shrink)

Higher courts sometimes assess the constitutionality of law by working through a concrete case, other times by reasoning about the underlying question in a more abstract way. Prior research has found that the degree of concreteness or abstraction with which an issue is formulated can influence people's prescriptive views: For instance, people often endorse punishment for concrete misdeeds that they would oppose if the circumstances were described abstractly. We sought to understand whether the so-called ‘abstract/concrete paradox’ also jeopardizes the consistency (...) of judicial reasoning. In a series of experiments, both lay and professional judges sometimes reached opposite conclusions when reasoning about concrete cases versus the underlying issues formulated in abstract terms. This effect emerged whether participants reasoned with broad principles, such as human dignity, or narrow rules, and was largest among individuals high in trait empathy. Finally, to understand whether people reflectively endorse the discrepancy between abstract and concrete resolutions, we examined their reactions when evaluating both, either simultaneously or sequentially. These approaches revealed no single pattern across lay and expert populations, or exploratory and confirmatory studies. Taken together, our studies suggest that empathic concern plays a greater role in guiding the judicial resolution of concrete cases than in illuminating judges' professed standards—which may result in concrete decisions in violation of their own abstract principles. (shrink)

To deal with reactive sequential decision tasks we present a learning model Clarion which is a hybrid connectionist model consisting of both localist and dis tributed representations based on the two level ap proach proposed in Sun The model learns and utilizes procedural and declarative knowledge tapping into the synergy of the two types of processes It uni es neural reinforcement and symbolic methods to perform on line bottom up learning Experiments in various situations are reported that shed light (...) on the working of the model.. (shrink)

Real-world economies are open-ended dynamic systems consisting of heterogeneous interacting participants. Human participants are decision-makers who strategically take into account the past actions and potential future actions of other participants. All participants are forced to be locally constructive, meaning their actions at any given time must be based on their local states; and participant actions at any given time affect future local states. Taken together, these essential properties imply real-world economies are locally-constructive sequential games. This paper discusses a modeling (...) approach, Agent-based Computational Economics, that permits researchers to study economic systems from this point of view. ACE modeling principles and objectives are first concisely presented and explained. The remainder of the paper then highlights challenging issues and edgier explorations that ACE researchers are currently pursuing. (shrink)

Research on escalation of commitment has predominantly been studied in the context of a single decision without consideration for the psychological consequences of escalating. This study sought to examine a) the extent to which people escalate their commitment to a failing course of action in a sequential decision-making task, b) confidence and anger as psychological consequences of escalation of commitment, and c) the reciprocal relationship between escalation of commitment and confidence and anger. Participants were 110 undergraduate students who completed (...) a series of investment decisions regarding a failing endeavor. Results revealed that although a high proportion of individuals escalate through all decisions, the extent to which they escalated decreased with each decision as they were less willing to invest money in the project. Furthermore, as participants escalated, confidence in one’s decision decreased and anger increased. Lastly, the analyses revealed that the relationship between escalation and confidence is reciprocal. Escalation was negatively associated with confidence, and confidence predicted escalation in the subsequent decision. These results highlight the importance of considering both the determinants and psychological consequences of escalation of commitment. (shrink)

When we learn how to throw darts we adjust how we throw based on where the darts stick. Much of skill learning is computationally similar in that we learn using feedback obtained after the completion of individual actions. We can formalize such tasks as a search problem; among the set of all possible actions, find the action that leads to the highest reward. In such cases our actions have two objectives: we want to best utilize what we already know (exploitation), (...) but we also want to learn to be more successful in the future (exploration). Here we tested how participants learn movement trajectories where feedback is provided as a monetary reward that depends on the chosen trajectory. We mathematically derived the optimal search policy for our experiment using decision theory. The search behavior of participants is well predicted by an ideal searcher model that optimally combines exploration and exploitation. (shrink)

The research reported here was the first empirical examination of strategic voting under the Sequential Voting by Veto (SVV) voting procedure, proposed by Mueller (1978). According to this procedure, a sequence of n voters must select s out of s+m alternatives (m=n=2; s>0). Hence, the number of alternatives exceeds the number of participants by one (n+1). When the ith voter casts her vote, she vetoes the alternative against which a veto has not yet been cast, and the s remaining (...) non-vetoed alternatives are elected. The SVV procedure invokes the minority principle, and it has advantages over all majoritarian procedures; this makes SVV a very desirable means for relatively small groups to make collective decisions. Felsenthal and Machover (1992) pointed out three models of voting under SVV: sincere, optimal, and canonical. The current research investigated, through laboratory experiments, which cognitive model better accounts for the voters' observed behavior and the likelihood of obtaining the optimal outcome as a function of the size of n (when s=1). The findings suggest that while voters under SVV use all three models, their choice is conditioned by group size. In the small groups (n=3), the canonical mode was a better predictor than the sincere model. In the larger groups (n=5), the sincere model was a better predictor than the canonical model. There is also evidence of players' learning during the experiment. (shrink)

This paper analyzes a model of sequential parimutuel betting described as a two-horse race with a finite number of noise bettors and a finite number of strategic and symmetrically informed bettors. For generic objective probabilities that the favorite wins the race, a unique subgame perfect equilibrium is characterized. Additionally, two explanations for the favorite–longshot bias—according to which favorites win more often than the market's estimate of their winning chances imply—are offered. It is shown that this robust anomalous empirical regularity (...) might be due to the presence of transaction costs and/or to strategic bettors' subjective attitude to probabilities. (shrink)

Decision-makers frequently struggle to base their choices on an exhaustive evaluation of all options at stake. This is particularly so when the choice problem at hand is complex, because the available alternatives are hard to compare. Rather than striving to choose the most valuable alternative, in such situations decision-makers often settle for the choice of an alternative which is not inferior to any other available alternative instead. In this paper, we extend two established models of boundedly rational choice, the categorize (...) then choose heuristic and the rational shortlist method, to incorporate this kind of “indecisive” choice behavior. We study some properties of these extensions and provide full behavioral characterizations. (shrink)