Human Decision-Making under Limited Time

Alan Stocker

Abstract: Subjective expected utility theory assumes that decision-makers possess unlimited computational resources to reason about their choices; however, virtually all deci- sions in everyday life are made under resource constraints—i.e. decision-makers are bounded in their rationality. Here we experimentally tested the predictions made by a formalization of bounded rationality based on ideas from statistical mechanics and information-theory. We systematically tested human subjects in their ability to solve combinatorial puzzles under different time limitations. We found that our bounded-rational model accounts well for the data. The decompo- sition of the fitted model parameter into the subjects’ expected utility function and resource parameter provide interesting insight into the subjects’ information ca- pacity limits. Our results confirm that humans gradually fall back on their learned prior choice patterns when confronted with increasing resource limitations.