You don’t want to know what you’re missing

Abstract (Via SJDM)

When people learn to make decisions from experience, a reasonable intuition is that additional relevant information should improve their performance. In contrast, we find that additional information about foregone rewards (i.e., what could have gained at each point by making a different choice) severely hinders participants’ ability to repeatedly make choices that maximize long-term gains. We conclude that foregone reward information accentuates the local superiority of short-term options (e.g., consumption) and consequently biases choice away from productive long-term options (e.g., exercise). These conclusions are consistent with a standard reinforcement-learning mechanism that processes information about experienced and forgone rewards. In contrast to related contributions using delay-of-gratification paradigms, we do not posit separate top-down and emotion-driven systems to explain performance. We find that individual and group data are well characterized by a single reinforcement-learning mechanism that combines information about experienced and foregone rewards.

Introduction (via SJDM)

When immediate temptations conflict with long-term aspirations, immediate temptations often prevail and important goals remain unfulfilled (Loewenstein, 1996; Rachlin, 1995). Such failures of self-control are well documented in behavioral domains as diverse as dieting, smoking, and interpersonal conflict (Baumeister, Heatherton, & Tice, 1996). The ability to forego small immediate rewards in order to receive larger future rewards is viewed as a hallmark of effective self-control in both humans and animals (Ainslie, 1975; Rachlin & Green, 1972). In this report, we examine the impact of information about foregone (or fictive) outcomes on human decision-making behavior in situations in which shortand long-term rewards are in conflict. These forgone outcomes are counterfactual rewards that could have been obtained had one made alternate choices. Our task captures aspects of real-world tasks in which people face repeated choices with outcomes determined by past choices as well as current choices.

Findings (Via SJDM)

More information, especially when capacity is available to process it, is usually considered a positive. However, as shown in this report, when additional information is included about what could have been (i.e., forgone rewards), people perform worse in a dynamic decision task in which short- and long-term rewards are in conflict. As in a number of real-world situations, maximization of long-term rewards in our study required that the decisionmaker learn to forego larger immediate rewards guaranteed by one option and instead persist with a locally inferior option (Rachlin, 1995). Our study revealed that veridical information about foregone rewards holds deleterious effects for reward-maximizing choice in our task environment.

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26. March 2010 by Miguel Barbosa
Categories: Behavioral Economics, Curated Readings | Leave a comment

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