Network approach for decision making under risk-How do we choose among probabilistic options with the same expected value?

Wei Pan; Yi-Shin Chen

doi:10.1371/journal.pone.0196060

Network approach for decision making under risk-How do we choose among probabilistic options with the same expected value?

PLoS One. 2018 Apr 27;13(4):e0196060. doi: 10.1371/journal.pone.0196060. eCollection 2018.

Authors

Wei Pan^{1

2

3

4}, Yi-Shin Chen^{5

6}

Affiliations

¹ Institute of Physics, Academia Sinica, Taipei 115, Taiwan.
² Department of Physics, Chung Yuan Christian University, Tao-Yuan 320, Taiwan.
³ Center for General Education, National Tsing Hua University, Hsin-Chu 300, Taiwan.
⁴ Tsio-Hai Waldorf School, Hsin-Chu 305, Taiwan.
⁵ Institute of Information Systems and Applications, National Tsing-Hua University, Hisn-Chu 300, Taiwan.
⁶ Department of Computer Science, National Tsing-Hua University, Hisn-Chu 300, Taiwan.

Abstract

Conventional decision theory suggests that under risk, people choose option(s) by maximizing the expected utility. However, theories deal ambiguously with different options that have the same expected utility. A network approach is proposed by introducing 'goal' and 'time' factors to reduce the ambiguity in strategies for calculating the time-dependent probability of reaching a goal. As such, a mathematical foundation that explains the irrational behavior of choosing an option with a lower expected utility is revealed, which could imply that humans possess rationality in foresight.

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

Algorithms
Decision Making*
Decision Theory
Humans
Probability

Grants and funding

This work was supported from Ministry of Science and Technology, Taiwan in grant No. MOST-106-2221-E-007-115-MY2, MOST-106-3114-E-007-013, and MOST-105-2112-M-033-003.