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Testing Models of Complexity Aversion

Research output: Working paper

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Testing Models of Complexity Aversion. / Georgalos, Konstantinos; Nabil, Nathan.
Lancaster: Lancaster University, Department of Economics, 2023. (Economics Working Papers Series).

Research output: Working paper

Harvard

Georgalos, K & Nabil, N 2023 'Testing Models of Complexity Aversion' Economics Working Papers Series, Lancaster University, Department of Economics, Lancaster.

APA

Georgalos, K., & Nabil, N. (2023). Testing Models of Complexity Aversion. (Economics Working Papers Series). Lancaster University, Department of Economics.

Vancouver

Georgalos K, Nabil N. Testing Models of Complexity Aversion. Lancaster: Lancaster University, Department of Economics. 2023 Nov 2. (Economics Working Papers Series).

Author

Georgalos, Konstantinos ; Nabil, Nathan. / Testing Models of Complexity Aversion. Lancaster : Lancaster University, Department of Economics, 2023. (Economics Working Papers Series).

Bibtex

@techreport{935c1027374b41e3b97f7ee70a3ee621,
title = "Testing Models of Complexity Aversion",
abstract = "In this paper we aim to investigate how the complexity of a decision-task may change an agents strategic behaviour as a result of increased cognitive fatigue. In this framework, complexity is defined as a function of the number of outcomes in a lottery. Using Bayesian inference techniques, we quantitatively specify and estimate adaptive toolbox models of cognition, which we rigorously test against popular expectation based models; modified to account for complexity aversion. We find that for the majority of the subjects, a toolbox model performs best both in-sample, and with regards to its predictive capacity out-of-sample, suggesting that individuals result to heuristics when the complexity of a task overwhelms their cognitive load.",
keywords = "Complexity aversion, Toolbox models, Heuristics, Risky choice, Bayesian modelling",
author = "Konstantinos Georgalos and Nathan Nabil",
year = "2023",
month = nov,
day = "2",
language = "English",
series = "Economics Working Papers Series",
publisher = "Lancaster University, Department of Economics",
type = "WorkingPaper",
institution = "Lancaster University, Department of Economics",

}

RIS

TY - UNPB

T1 - Testing Models of Complexity Aversion

AU - Georgalos, Konstantinos

AU - Nabil, Nathan

PY - 2023/11/2

Y1 - 2023/11/2

N2 - In this paper we aim to investigate how the complexity of a decision-task may change an agents strategic behaviour as a result of increased cognitive fatigue. In this framework, complexity is defined as a function of the number of outcomes in a lottery. Using Bayesian inference techniques, we quantitatively specify and estimate adaptive toolbox models of cognition, which we rigorously test against popular expectation based models; modified to account for complexity aversion. We find that for the majority of the subjects, a toolbox model performs best both in-sample, and with regards to its predictive capacity out-of-sample, suggesting that individuals result to heuristics when the complexity of a task overwhelms their cognitive load.

AB - In this paper we aim to investigate how the complexity of a decision-task may change an agents strategic behaviour as a result of increased cognitive fatigue. In this framework, complexity is defined as a function of the number of outcomes in a lottery. Using Bayesian inference techniques, we quantitatively specify and estimate adaptive toolbox models of cognition, which we rigorously test against popular expectation based models; modified to account for complexity aversion. We find that for the majority of the subjects, a toolbox model performs best both in-sample, and with regards to its predictive capacity out-of-sample, suggesting that individuals result to heuristics when the complexity of a task overwhelms their cognitive load.

KW - Complexity aversion

KW - Toolbox models

KW - Heuristics

KW - Risky choice

KW - Bayesian modelling

M3 - Working paper

T3 - Economics Working Papers Series

BT - Testing Models of Complexity Aversion

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -