By Itzhak Gilboa, David Schmeidler
Gilboa and Schmeidler supply a brand new paradigm for modeling selection making lower than uncertainty. Case-based choice concept means that humans make judgements by way of analogies to earlier circumstances: they generally tend to decide on acts that played good some time past in related occasions, and to prevent acts that played poorly. The authors describe the overall concept 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 software idea in addition to to rule-based systems.
"This textual content is a wonderful advent to optimization theory." Richard A. Chechile, magazine of Mathematical Psychology
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Additional info for A Theory of Case-Based Decisions
It is more natural to explicitly model a similarity function between acts. Moreover, in many cases the similarity function is most naturally deﬁned on problem-act pairs. For example, “Driving on the left in New York” may be more similar to “Driving on the right in London” than to “Driving on the left in London”, “Buying when the price is low” may be more similar to “Selling when the price is high” than to “Selling when the price is low”, and so forth. In short, we would like to have a model in which the similarity function s is deﬁned on problem-act pairs, and, given a memory M and a decision problem p, each act a is evaluated according to the weighted sum U (a) = Up,M (a) = s((p, a), (q, b))u(r).
Prologue Our deﬁnition has two properties that we ﬁnd necessary for any deﬁnition of rationality and one that we ﬁnd useful for our purposes. First, as mentioned above, it relies on cognitive or introspective data, as well as on behavioral data, and it cannot be applied to decision makers who cannot understand the analysis of their decisions. According to this deﬁnition it is meaningless to ask whether, say, bees, are rational. Second, it is subjective in nature. A decision maker who, despite all our preaching, insists on making framedependent choices, will have to be admitted into the hall of rationality.
Speciﬁcally, we ﬁnd that expected utility theory is not always cognitively plausible, and that the behavioral approach, often quoted as its theoretical foundation, is untenable. Moreover, we believe that expected utility theory is not always successful as a normative theory, because it is often impractical. And in those cases where one cannot follow expected utility theory, it is neither 27 A theory of case-based decisions irrational, nor even boundedly rational, to deviate from Savage’s postulates.
A Theory of Case-Based Decisions by Itzhak Gilboa, David Schmeidler