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Angela Yu

(Internal Seminar)

 

(http://www.cogsci.ucsd.edu/~ajyu/)

University of California, San Diego (UCSD)

 

Thursday 1st November 2012

Time: 3.30pm

 

4th floor Seminar Room

Alexandra House, 17 Queen Square, London, WC1N 3AR

 

 

A rational account of contextual effects in preference
choice: What makes for a bargain?

 

When choosing among options that differ along multiple attribute dimensions, such as in consumer decision-making, humans exhibit peculiar preference reversals based on context. For instance, the attraction, similarity, and compromise effects each involves a change in relative preference between two options when a third option is introduced.
Previously, such contextual effects have been attributed to biases or sub-optimalities in human decision-making, or byproducts of specific architectural or dynamical constraints on neural processing.  Here, we use a Bayesian model of preference choice to demonstrate that such contextual effects naturally arise as rational consequences of three basic assumptions: (1) humans make preferential choices based on relative values anchored with respect to ``fair market value'', which is inferred from both prior experience and the set of available options;
(2) different attributes are imperfect substitutes for one another, so that abundance in one attribute cannot perfectly make up for inadequacy in another; (3) uncertainty in posterior belief about ``market conditions'' induces stochasticity in preference on repeated presentations of the same options. This model not only provides a principled explanation for {\it why} specific types of contextual modulation of preference choice exist, but a means to {\it infer} individual and group preferences in novel contexts given observed choices.

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