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Dynamic and consequential consistency of choices between paths of decision trees
J R Busemeyer1, E Weg, R Barkan
1Department of Psychology, Indiana University, Bloomington, Indiana 47405, USA. jbusemey@indiana.edu
Journal of Experimental Psychology. General
|January 6, 2001
Summary
Decision-making strategies often fail to adhere to consistency principles. Experiments reveal that strategic and dynamic consistency are frequently violated in decision tree analysis.
Area of Science:
- Decision Analysis
- Behavioral Economics
- Cognitive Psychology
Background:
- Decision trees are commonly used for strategic planning.
- Backward induction analysis relies on three core consistency principles: dynamic, consequential, and strategic.
- These principles ensure rational and consistent decision-making over time.
Purpose of the Study:
- To empirically test the adherence to dynamic, consequential, and strategic consistency principles in decision-making.
- To investigate the frequency of violations of these fundamental consistency principles.
- To explore factors influencing decision-maker consistency.
Main Methods:
- Five experiments were conducted with diverse participant groups.
- Decision-making scenarios were presented using decision trees.
- Consistency was assessed through specific procedures, with gamble attractiveness manipulated at the final stage.
Main Results:
- Violations of strategic consistency were observed at significant rates.
- Dynamic consistency principles were also frequently violated by participants.
- The rate of inconsistency exceeded expected levels based on the principles.
Conclusions:
- Standard backward induction assumptions may not accurately reflect real-world decision-making.
- Decision-makers often deviate from dynamic and strategic consistency, challenging traditional models.
- Further research is needed to understand and potentially improve consistent decision strategies.
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