Decision-experience gap #
In the study of decision making in behavioural economics, researchers have noticed there is a difference between “decision from description”, where decisions are made based on explicitly stated expected outcomes and the probability distribution they are being drawn from, and “decision from experience”, which is how almost all real-world decisions are made: by inferring the distribution and outcomes from experience. There is a significant gap in the types of decisions made under these two paradigms. It’s an important idea in behavioural economics, and one I explored briefly when considering driver incentive modelling at Via.
- This survey paper by Israeli behavioural economist Ido Erev and Ralph Hertwig.