Biases in human behavior
Egidi, Massimo (2002) Biases in human behavior. [Working Paper]. p. 33. CEEL Working Papers (No. 0205).

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Abstract/Index
The paper shows that biases in individual’s decisionmaking may result from the process of mental editing by which subjects produce a “representation” of the decision problem. During this process, individuals make systematic use of default classification in order to reduce the shortterm memory load and the complexity of symbolic manipulation. The result is the construction of an imperfect mental representation of the problem that nevertheless has the advantage of being simple, and yielding “satisficing” decisions. The imperfection origins in a tradeoff that exists between the simplicity of representation of a strategy and his efficiency. To obtain simplicity, the strategy’s rules have to be memorized and represented with some degree of abstraction, that allow to drastically reduce their number. Raising the level of abstraction with which a strategy’s rule is represented, means to extend the domain of validity of the rule beyond the field in which the rule has been experimented, and may therefore induce to include unintentionally domains in which the rule is inefficient. Therefore the rise of errors in the mental representation of a problem may be the "natural" effect of the categorization and the identification of the building blocks of a strategy. The biases may be persistent and give rise to lockin effect, in which individuals remain trapped in suboptimal strategies, as it is proved by experimental results on stability of suboptimal strategies in games like Target The Two. To understand why suboptimal strategies, that embody errors, are locally stable, i.e. cannot be improved by small changes in the rules, it is considered Kauffman’ NK model, because, among other properties, it shows that if there are interdependencies among the rules of a system, than the system admits many suboptimal solutions that are locally stable, i.e. cannot be improved by simple mutations. But the fitness function in NK model is a random one, while in our context it is more reasonable to define the fitness of a strategy as efficiency of the program. If we introduce this kind of fitness, then the stability properties of the NK model do not hold any longer: the paper shows that while the elementary statements of a strategy are interdependent, it is possible to achieve an optimal configuration of the strategy via mutations and in consequence the suboptimal solutions are not locally stable under mutations. The paper therefore provides a different explanation of the existence and stability of suboptimal strategies, based on the difficulty to redefine the subproblems that constitute the building blocks of the problem’s representation.
Item Type:  Report / Paper (Working Paper) 

Research documents and activity classification:  Working Papers > NonRefereed Working Papers / of national relevance only 
Divisions:  Department of Business and Management 
MIUR Scientific Area:  Area 13  Economics and Statistics > SECSP/01 Political Economy 
Deposited by:  Maria Teresa Nistico 
Date Deposited:  23 Nov 2010 09:49 
Last Modified:  21 Apr 2015 23:13 
URI:  http://eprints.luiss.it/id/eprint/744 
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