Drift-diffusion models: a direct verification

Michal Krawczyk

No 2018-12, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: I conduct a laboratory experiment aimed at verifying the drift-diffusion model. The subjects are shown a sequence of noisy signals of the difference in cash value of two options. Every realization of the signal was costly and the subjects could stop observing it and make their decision at any point. As the cost of the signal, the expected value of each option, the standard deviation of these values and the actual values were systematically varied across 200 rounds, several predictions of the model could be put to a test. In all but one case these predictions were correct.

Keywords: drift-diffusion model; sequential sampling (search for similar items in EconPapers)
JEL-codes: C9 D8 D9 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2018
New Economics Papers: this item is included in nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2018-12

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