By Itzhak Gilboa, David Schmeidler
Gilboa and Schmeidler offer a brand new paradigm for modeling selection making lower than uncertainty. Case-based selection idea means that humans make judgements by means of analogies to prior instances: they generally tend to decide on acts that played good long ago in related events, and to prevent acts that played poorly. The authors describe the overall idea and its dating to making plans, repeated selection difficulties, inductive inference, and studying. They spotlight its mathematical and philosophical foundations and examine it to anticipated application concept in addition to to rule-based systems.
"This textual content is a superb creation to optimization theory." Richard A. Chechile, magazine of Mathematical Psychology
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Extra resources for A Theory of Case-Based Decisions
This assumption is valid when one chooses between bets on, say, the color of a ball drawn from an urn. In this case it is quite clear that the states of the world correspond to the balls in the urn, and these states are observable by the modeler. But in many problems to which the theory is applied, states of the world need to be deﬁned, and there is more than one way to deﬁne them. In these cases one cannot be sure that the states that are supposedly conceived of by the decision maker are those to which the formal model refers.
We later extend the formal model to include similarity judgments between pairs of problems and acts, and even between entire cases. The decision maker is also characterized by a utility function: u : R → R. The utility function measures the desirability of outcomes. The higher is the value of this function, the more desirable is the outcome considered to be. Moreover, 5 This restriction may pose a problem in our example. It can be solved by assuming that Sarah assigns negative utility values to outcomes that Jim likes.
3, what are the chances that a military intervention will develop into a full-blown war, while air strikes will not? What is the probability that a scenario that no expert predicted will eventually materialize? It seems unlikely that decision makers can answer these questions. Expected utility theory does not describe the way people actually think about such problems. Correspondingly, it is doubtful that EUT is the most useful tool for predicting behavior in decision problems of this nature. A theory that will provide a more faithful description of how people think would have a better chance of predicting what they will do.
A Theory of Case-Based Decisions by Itzhak Gilboa, David Schmeidler