Stochastic Choice and Optimal Sequential Sampling
40 Pages Posted: 6 May 2015 Last revised: 22 Mar 2017
Date Written: March 20, 2017
We model the joint distribution of choice probabilities and decision times in binary decisions as the solution to a problem of optimal sequential sampling, where the agent is uncertain of the utility of each action and pays a constant cost per unit time for gathering information. We show that choices are more likely to be correct when the agent chooses to decide quickly provided that the agent’s prior beliefs are correct. This better matches the observed correlation between decision time and choice probability than does the classical drift-diffusion model (DDM), where the agent knows the utility difference between the choices.
JEL Classification: C44, D83
Suggested Citation: Suggested Citation