Technical Report #224

Conflict and the Stochastic Dominance Principle of Decision Making

Adele Diederich, Univesitat Oldenburg
Jerome R. Busemeyer, Indiana University

Abstract

One of the key principles underlying rational models of decision making is the idea that the decision maker should never choose a stochastically dominated action over a dominant action. In this article, violations of stochastic dominance frequently occurred when the payoffs produced by two actions were negatively correlated (in conflict), but no violations occurred when the payoffs were positively correlated (no conflict). This finding is contrary to models which assume that choice probability depends on the utility of each action, and the utility for an action depends solely on its univariate payoff distribution. This article also reports, for the first time ever, the distribution of response times observed in a risky decision task. Both the violations of stochastic dominance and the response time distributions are explained in terms of a dynamic theory of decision making called decision field theory extended to multi-attribute consequences.