Speed, Accuracy, and the Optimal Timing of Choices
Name
aer.20150742.pdf
Description
Published version
Size
733.91 KB
Format
Adobe PDF
Checksum (MD5)
1673503c8012ac4572907214bbf19df4
Author(s)
Fudenberg, Drew
Strack, Philipp
Strzalecki, Tomasz
Date Issued
2018
Journal
American Economic Review
Publisher
American Economic Association
Version
Final published version
Abstract
© 2018 American Economic Association. We model the joint distribution of choice probabilities and decision times in binary decisions as the solution to a problem of optimal sequential sampling, where the agent is uncertain of the utility of each action and pays a constant cost per unit time for gathering information. We show that choices are more likely to be correct when the agent chooses to decide quickly, provided the agent's prior beliefs are correct. This better matches the observed correlation between decision time and choice probability than does the classical drift-diffusion model (DDM), where the agent knows the utility difference between the choices.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1257/AER.20150742
