Decision Making: Probabilities vs Unequivocal Recommendations

Probability and recommendation

To sidestep errors boundedly rational decision makers are prone to make

Inducing a cry wolf effect, reducing compliance with future recommendations

<p>Cost-loss game</p> Signup and view all the answers

<p>Neither (no forecast information), Probability, Recommendation, Both</p> Signup and view all the answers

<p>Detailed explanation of how the recommendation is determined</p> Signup and view all the answers

<p>Probability and recommendation forecasts increase the frequency of expected value optimal actions.</p> Signup and view all the answers

<p>A combination forecast captures most of the benefits of the individual recommendation and probability forecasts.</p> Signup and view all the answers

<p>Explaining how recommendation is determined did not significantly improve the frequency of taking either status quo or siren action.</p> Signup and view all the answers

<p>Adding probability information increases the frequency of taking siren action when it is optimal and somewhat decreases the frequency of taking the status quo action when it is optimal.</p> Signup and view all the answers

<p>Risk aversion did not fully explain the differences in performance between probability and recommendation forecasts, although it may play some role.</p> Signup and view all the answers

<p>The cry wolf effect reduces the decision maker's adherence to future recommendations when the unequivocal recommendation turns out to be wrong in hindsight.</p> Signup and view all the answers