The allocation of time in decision-making.
We study the allocation of time across decision problems. If a decision-maker (1) has noisy estimates of value, (2) improves those estimates the longer he or she analyzes a choice problem, and (3) allocates time optimally, then the decision-maker should spend less time choosing when the difference in value between two options is relatively large. To test this prediction we ask subjects to make 27 binary incentive-compatible intertemporal choices, and measure response time for each decision. Our time allocation model explains 54% of the variance in average decision time. These results support the view that decision-making is a cognitively costly activity that uses time as an input allocated according to cost-benefit principles.
Chabris
Christopher F
CF
Union College.
Laibson
David
D
Morris
Carrie L
CL
Schuldt
Jonathon P
JP
Taubinsky
Dmitry
D