An economic decision-making model of anticipated surprise with dynamic expectation

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Available

Host

van Vreeswijk TNS

Duration

70 minutes

Abstract

When making decision under risk, people often exhibit behaviours that classical economic theories cannot explain. Newer models that attempt to account for these ‘irrational’ behaviours often lack neuroscience bases and require the introduction of subjective and problem-specific constructs. Here, we present a decision-making model inspired by the prediction error signals and introspective neuronal replay reported in the brain. In the model, decisions are chosen based on ‘anticipated surprise’, defined by a nonlinear average of the differences between individual outcomes and a reference point. The reference point is determined by the expected value of the possible outcomes, which can dynamically change during the mental simulation of decision-making problems involving sequential stages. Our model elucidates the contribution of each stage to the appeal of available options in a decision-making problem. This allows us to explain several economic paradoxes and gambling behaviours. Our work could help bridge the gap between decision-making theories in economics and neurosciences.

Topics

anticipated surprise decision-making model economic decision-making expected value gambling behaviours mental simulation neuronal replay prediction error reference point

An economic decision-making model of anticipated surprise with dynamic expectation

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