An experiment on case-based decision making

Abstract

We experimentally investigate the disposition of decision makers to use case-based reasoning as suggested by Hume (An enquiry concerning human understanding, 1748) and formalized by case-based decision theory (Gilboa and Schmeidler in Q J Econ 110:605–639, 1995). Our subjects face a monopoly decision problem about which they have very limited information. Information is presented in a manner which makes similarity judgements according to the feature matching model of Tversky (Psychol Rev 84:327–352, 1977) plausible. We provide subjects a “history” of cases. In the (Formula presented.) between-subject design, we vary whether information about the current market is given and whether immediate feedback about obtained profits is provided. The results provide support for the predictions of case-based decision theory, particularly when no immediate feedback is provided.