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On surprise, change, and the effect of recent outcomes
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Nevo, Iris and Erev, Ido (2012) On surprise, change, and the effect of recent outcomes. Frontiers in psychology, Volume 3 . pp. 1-9. 24. doi:10.3389/fpsyg.2012.00024 ISSN 1664-1078.
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Official URL: http://dx.doi.org/10.3389/fpsyg.2012.00024
Abstract
The leading models of human and animal learning rest on the assumption that individuals tend to select the alternatives that led to the best recent outcomes. The current research highlights three boundaries of this “recency” assumption. Analysis of the stock market and simple laboratory experiments suggests that positively surprising obtained payoffs, and negatively surprising forgone payoffs reduce the rate of repeating the previous choice. In addition, all previous trails outcomes, except the latest outcome (most recent), have similar effect on future choices. We show that these results, and other robust properties of decisions from experience, can be captured with a simple addition to the leading models: the assumption that surprise triggers change.
Item Type: | Journal Article | ||||||||||
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Subjects: | H Social Sciences > HF Commerce | ||||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Finance -- Psychological aspects | ||||||||||
Journal or Publication Title: | Frontiers in psychology | ||||||||||
Publisher: | Frontiers Research Foundation | ||||||||||
ISSN: | 1664-1078 | ||||||||||
Official Date: | 21 February 2012 | ||||||||||
Dates: |
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Volume: | Volume 3 | ||||||||||
Number of Pages: | 9 | ||||||||||
Page Range: | pp. 1-9 | ||||||||||
Article Number: | 24 | ||||||||||
DOI: | 10.3389/fpsyg.2012.00024 | ||||||||||
Status: | Not Peer Reviewed | ||||||||||
Publication Status: | Published | ||||||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||||||
Funder: | Israel Science Foundation (ISF) |
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