Stochastic representation decision theory: How probabilities and values are entangled dual characteristics in cognitive processes.

ABSTRACT: Humans are notoriously bad at understanding probabilities, exhibiting a host of biases and distortions that are context dependent. This has serious consequences on how we assess risks and make decisions. Several theories have been developed to replace the normative rational expectation theory at the foundation of economics. These approaches essentially assume that (subjective) probabilities weight multiplicatively the utilities of the alternatives offered to the decision maker, although evidence suggest that probability weights and utilities are often not separable in the mind of the decision maker. In this context, we introduce a simple and efficient framework on how to describe the inherently probabilistic human decision-making process, based on a representation of the deliberation activ

SUBMITTER: Ferro GM 

PROVIDER: S-EPMC7735623 | biostudies-literature | 2020

REPOSITORIES: biostudies-literature