Previous research documents two pairs of inconsistent reactions to rare events: 1) Studies of probability judgment reveal conservatism which implies overestimation of rare events, and overconfidence which implies underestimation of rare events. 2) Studies of choice behavior reveal overweighting...

This paper examines the effects of different cultural backgrounds on decisions from experience. In Experiment 1, participants from Denmark, Israel, and Taiwan faced each of six binary choice problems for 200 trials. The participants did not receive prior description of the payoff distributions,...

This paper examines the effect of default options on choice behavior in experience-based decisions. To this end, we designed the “radio-button” experimental paradigm, in which participants are asked to set default options that remain effective until they decide to change them, and the...

Previous research documents two pairs of inconsistent reactions to rare events: 1) Studies of probability judgment reveal conservatism which implies overestimation of rare events, and overconfidence which implies underestimation of rare events; 2) Studies of choice behavior reveal overweighting...

In this paper, we claim that agents confronting with new interactive situations apply behavioral heuristics that drastically reduce the problem complexity either by neglecting the other players’ incentives, or by restricting attention to subsets of “salient” outcomes. We postulate that...