Case-Based Decision Theory: An Experimental Report

Abstract

Theoretical models as Expected Utility Theory (EUT) start from the premise that decision making individuals follow subjective rules which they found e. g. on their personal probability judgements. Thus, EUT requires that the decision maker has a complete knowledge of all relevant states of the world and consequences of possible actions. Often, there is a lack of information basis to attribute probabilities to states of the world and to evaluate the utility of potentially occurring consequences. In such cases, alternative decision theories to EUT are to be applied for a reality adequate explanation of decision-making processes. Such a theory, being presented in the following, is Case-Based Decision Theory (CBDT), which will be analysed experimentally with respect to its empirical validity. The results shall substantiate the validity of the premises and the methods of the CBDT in the context of a repeated-choice problem.