Randomization

Christo A. Pirinsky ()
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Christo A. Pirinsky: University of Central Florida, Business Administration and Finance

Chapter 5 in A Theory of Dynamic Preferences, 2026, pp 73-91 from Springer

Abstract: Abstract This chapter introduces randomization as an exploration mechanism. It refers to the act or process of selecting objects or actions in a random way. By definition, a random choice cannot be an exploitation, i.e., it will always have an element of exploration. Randomization is contrasted with directed exploration, or the act of selecting actions based on their perceived net benefits. Randomization has important advantages compared to directed exploration. It takes less time and effort; it is also less vulnerable to influence. Operationalizing randomization, however, is not trivial. Traditional approaches (e.g., coin flipping) and modern mechanisms (e.g., random number generators) are not easily applicable in everyday life situations. The chapter argues that robust behavioral patterns could be rationalized as effective means for the promotion of exploration through randomization. It analyzes three such patterns introducing random elements into individual decisions: context-dependent choice, self-sabotaging behavior, and divination.

Keywords: Context-dependent choice; Decoy effect; Divination; Directed exploration; Framing effect; Random exploration; Random number generators; Self-sabotaging behavior; Sortition (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-032-13334-2_5

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DOI: 10.1007/978-3-032-13334-2_5

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