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Do humans make good decisions?

Economics, Psychology, decision making

Abstract

Human performance on perceptual classification tasks approaches that of an ideal observer, but economic decisions are often inconsistent and intransitive, with preferences reversing according to the local context. We discuss the view that suboptimal choices may result from the efficient coding of decision-relevant information, a strategy that allows expected inputs to be processed with higher gain than unexpected inputs. Efficient coding leads to ‘robust’ decisions that depart from optimality but maximise the information transmitted by a limited-capacity system in a rapidly-changing world. We review recent work showing that when perceptual environments are variable or volatile, perceptual decisions exhibit the same suboptimal context-dependence as economic choices, and we propose a general computational framework that accounts for findings across the two domains.

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