A multi-stage anticipated surprise model with dynamic expectation for economic decision-making.

ABSTRACT: There are many modeling works that aim to explain people's behaviors that violate classical economic theories. However, these models often do not take into full account the multi-stage nature of real-life problems and people's tendency in solving complicated problems sequentially. In this work, we propose a descriptive decision-making model for multi-stage problems with perceived post-decision information. In the model, decisions are chosen based on an entity which we call the 'anticipated surprise'. The reference point is determined by the expected value of the possible outcomes, which we assume to be dynamically changing during the mental simulation of a sequence of events. We illustrate how our formalism can help us understand prominent economic paradoxes and gambling behaviors that inv

SUBMITTER: Chan HK 

PROVIDER: S-EPMC10770108 | biostudies-literature | 2024 Jan

REPOSITORIES: biostudies-literature