An Experiment on Case-Based Decision Making

38 Pages Posted: 8 Nov 2007

See all articles by Brit Grosskopf

Brit Grosskopf

University of Exeter Business School - Department of Economics

Rajiv Sarin

Texas A&M University - Department of Economics

Elizabeth Watson

Trinity University

Date Written: November 7, 2007

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.

Keywords: Case-Based Reasoning, Similarity, Heuristics, Experiments

JEL Classification: C9, D8

Suggested Citation

Grosskopf, Brit and Sarin, Rajiv and Watson, Elizabeth, An Experiment on Case-Based Decision Making (November 7, 2007). Available at SSRN: https://ssrn.com/abstract=1028442 or http://dx.doi.org/10.2139/ssrn.1028442

Brit Grosskopf (Contact Author)

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, EX4 4RJ
United Kingdom

Rajiv Sarin

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States
979-845-7382 (Phone)

Elizabeth Watson

Trinity University ( email )

San Antonio, TX 78212
United States

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