Aiming to choose correctly or to choose wisely ? The optimality-accuracy trade-off in decisions under uncertainty
Thomas Garcia and
Sébastien Massoni ()
No 1714, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon
When making a decision under uncertainty, individuals aim to achieve opti- mality. In general, an accurate decision is optimal. However, in real life situations asymmetric stakes induce an unusual divergence between optimality and accuracy. We highlight this optimality-accuracy trade-off and study its origins using two experiments on perceptual decision making. We use Signal Detection Theory as a normative benchmark. The first experiment confirms the existence of an optimality-accuracy trade-off with a leading role of accuracy. The second experiment explains this trade-off by the concern of people for being right.
Keywords: optimality; accuracy; signal detection theory; incentives; experiment (search for similar items in EconPapers)
JEL-codes: D81 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Working Paper: Aiming to choose correctly or to choose wisely? The optimality-accuracy trade-off in decisions under uncertainty (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1714
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