Abstract
An important aspect of making good decisions is the ability to adapt to changes in the values of available choice options, and research suggests that we are poor at changing behavior and adapting our choices successfully. The current paper contributes to clarifying the role of memory on learning and successful adaptation to changing decision environments. We test two aspects of changing decision environments: the direction of change and the type of feedback. The direction of change refers to how options become more or less rewarding compared to other options, over time. Feedback refers to whether full or partial information about decision outcomes is received. Results from behavioral experiments revealed a robust effect of the direction of change: risk that becomes more rewarding over time is harder to detect than risk that becomes less rewarding over time; even with full feedback. We rely on three distinct computational models to interpret the role of memory on learning and adaptation. The distributions of individual model parameters were analyzed in relation to participants’ ability to successfully adapt to the changing conditions of the various decision environments. Consistent across the three models and two distinct data sets, results revealed the importance of recency as an individual memory component for choice adaptation. Individuals relying more on recent experiences were more successful at adapting to change, regardless of its direction. We explain the value and limitations of these findings as well as opportunities for future research.
Highlights
Most choices made at the organizational and personal levels, under risk or uncertainty, are encountered in changing environmental conditions
Experience often takes priority over having a description of the attributes of available choice options, and research suggests that descriptions end up being ignored altogether or discounted when making repeated risky choices (Lejarraga & Gonzalez, 2011; WeissCohen et al, 2016; but see Weiss-Cohen et al, 2018; Weiss-Cohen et al, 2021)
We investigate how personal experience, the direction in which available choice options change, and the availability of information influence how people adapt their choices in changing decision environments
Summary
Most choices made at the organizational and personal levels, under risk or uncertainty, are encountered in changing environmental conditions. Shopping may have been less attractive and less optimal than visiting a store, given high shipping and other associated costs. This situation has gradually changed: shipping costs have decreased, technology has advanced, and, because of convenience, online shopping has become more attractive compared to shopping at stores, changing the relative value of the alternatives over time. As well as in many other examples, it is important to become aware of the change in the value of the available options to adapt our choices and maximize benefits. Experience often takes priority over having a description of the attributes of available choice options, and research suggests that descriptions (e.g., payoffs and associated probabilities) end up being ignored altogether or discounted when making repeated risky choices (Lejarraga & Gonzalez, 2011; WeissCohen et al, 2016; but see Weiss-Cohen et al, 2018; Weiss-Cohen et al, 2021)
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