Tuesday 16th August 2022

High-value decisions are fast and accurate, inconsistent with diminishing value

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Significance

What information about economic value is incorporated into decision-makers’ choices? Across the decision sciences, several prominent models ignore average value, assuming that only value differences are incorporated into the decision-making process, while others assume diminishing sensitivity to value, suggesting that it should be more difficult to choose between high-value options. Other models suggest that high-value decisions should, if anything, be treated as less important (holding value difference constant). Across three experiments with very different types of choices (food, art, and learned stimuli), we find violations of these predictions. Contrary to expectations, the presence of high-value options makes decisions easier while also inducing more effort to get them right.

Abstract

It is a widely held belief that people’s choices are less sensitive to changes in value as value increases. For example, the subjective difference between $11 and $12 is believed to be smaller than between $1 and $2. This idea is consistent with applications of the Weber-Fechner Law and divisive normalization to value-based choice and with psychological interpretations of diminishing marginal utility. According to random utility theory in economics, smaller subjective differences predict less accurate choices. Meanwhile, in the context of sequential sampling models in psychology, smaller subjective differences also predict longer response times. Based on these models, we would predict decisions between high-value options to be slower and less accurate. In contrast, some have argued on normative grounds that choices between high-value options should be made with less caution, leading to faster and less accurate choices. Here, we model the dynamics of the choice process across three different choice domains, accounting for both discriminability and response caution. Contrary to predictions, we mostly observe faster and more accurate decisions (i.e., higher drift rates) between high-value options. We also observe that when participants are alerted about incoming high-value decisions, they exert more caution and not less. We rule out several explanations for these results, using tasks with both subjective and objective values. These results cast doubt on the notion that increasing value reduces discriminability.

Footnotes

    • Accepted December 20, 2021.
  • Author contributions: B.R.K.S., S.M.S., J.H., and I.K. designed research; B.R.K.S. performed research; B.R.K.S. analyzed data; and B.R.K.S. and I.K. wrote the paper.

  • The authors declare no competing interest.

  • This article is a PNAS Direct Submission.

  • This article contains supporting information online at https://www.pnas.org/lookup/suppl/doi:10.1073/pnas.2101508119/-/DCSupplemental.

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