Abstract
We experimentally investigate the disposition of decision makers to use case-based reasoning as suggested by Case-Based Decision Theory (Gilboa and Schmeidler, 1995). Our subjects face a monopoly decision problem about which they have very limited information. Information is presented in a manner which makes similarity judgements according to the feature matching model of Tversky (1977) very plausible. In a 2x2 between-subject design, we vary whether information about the current market is given, in addition to a history, or not. Furthermore, we investigate the impact feedback has on behavior in several independent markets by either giving immediate feedback about obtained profits or not. The results provide some support for the predictions of Case-Based Decision Theory, particularly when no immediate feedback is given. We also find evidence that other simple heuristics are used.
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