Degrees of uncertainty: An overview and framework for future research on experience‐based choice

Abstract

Abstract A striking finding has emerged recently in the literature: When decision makers are faced with essentially the same choice, their preferences differ as a function of whether options are described or are “experienced” via observation and feedback. For example, when presented the described choice: (A) A 90% chance of $0 and a 10% chance of $10 or (B) $1 for sure, people tend to prefer (A). But when those same two options are experienced through observation of “draws” from two payoff distributions that match the described options, the modal preference reverses. Why? This is just one question that the papers in this special issue address. In addition, they address the rich repertoire of issues that arise when one considers experience‐based choices. The decisions‐from‐experience paradigm—with its focus on the acquisition and integration of information prior to choice, as well the choice itself—taps many of the fundamentals of psychology (learning, memory, encoding, knowledge representation, modelling) thus inspiring novel and fruitful avenues for research. This paper reviews recent research on experience‐based choice, and highlights the contribution of the papers in the special issue. The paper introduces a framework that places different types of decisions along a continuum of uncertainty about what one is choosing between, which emphasizes the rich and varied role of “experience” in decision making. It ends by identifying important unsolved questions that are ripe for future research. Copyright © 2009 John Wiley & Sons, Ltd.