Take-the-best and other simple strategies: Why and when they work 'well' in binary choice

Robin Hogarth () and Natalia Karelaia

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: The effectiveness of decision rules depends on characteristics of both rules and environments. A theoretical analysis of environments specifies the relative predictive accuracies of the lexicographic rule 'take-the-best' (TTB) and other simple strategies for binary choice. We identify three factors: how the environment weights variables; characteristics of choice sets; and error. For cases involving from three to five binary cues, TTB is effective across many environments. However, hybrids of equal weights (EW) and TTB models are more effective as environments become more compensatory. In the presence of error, TTB and similar models do not predict much better than a naïve model that exploits dominance. We emphasize psychological implications and the need for more complete theories of the environment that include the role of error.

Keywords: Decision making; bounded rationality; lexicographic rules; Leex (search for similar items in EconPapers)
JEL-codes: D81 M10 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-dcm and nep-evo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://econ-papers.upf.edu/papers/709.pdf Whole Paper (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:709

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).