title: On surprise, change, and the effect of recent outcomes.
abstract: The leading models of human and animal learning rest on the assumption that individuals tend to select the alternatives that led to the best recent outcomes. The current research highlights three boundaries of this "recency" assumption. Analysis of the stock market and simple laboratory experiments suggests that positively surprising obtained payoffs, and negatively surprising forgone payoffs reduce the rate of repeating the previous choice. In addition, all previous trails outcomes, except the latest outcome (most recent), have similar effect on future choices. We show that these results, and other robust properties of decisions from experience, can be captured with a simple addition to the leading models: the assumption that surprise triggers change.
authors.affiliation: Technion - Israel Institute of Technology Haifa, Israel.
authors.forename: Iris
authors.initials: I
authors.lastname: Nevo
authors.forename: Ido
authors.initials: I
authors.lastname: Erev