Adaptation Processes
People’s decisions are influenced by their experience. When buying a new car, for instance, people’s past experience will strongly influence their purchase. Someone satisfyingly driving a Mercedes for several years might not seriously consider other brands when buying a new car even if new attractive cars have been introduced to the market. Similarly, investment decisions are often influenced by an investor’s past investment failures. How experience changes people’s behavior has traditionally been described by learning models. The present project focuses on how models of bounded rationality improve explanations of people’s behavior when they take learning and memory effects into account.
