While there is an extensive literature concerning human decision under risk, most experiments focus on a single decision at a single point in time employing isolated trials presented in randomized order. The outcome of any one decision does not limit or increase the range of actions available on later trials. Any sequential effects found are simply errors.
In a cumulative allocation game – in contrast – the key decision on every trial is to choose how much of your accumulated wealth to gamble and how much to reserve. On half the trials you lose whatever you gamble; on the remaining trials you receive back between two and four times your bet. With an appropriate strategy you can expect to “grow” your wealth exponentially with very little chance of ruin. Such games play an important role in ethology (optimal foraging) and in economics (repeated investment and possible ruin) as well as in psychology.
In two experiments we compared human performance to normative. We also examined how players’ beliefs about the stopping rule (how the game terminates) affected play. We derived four properties of normative play and tested whether human performance conformed to each. Human performance deviated from optimal maximizing expected rate of growth. Players initially adopted investment rates that were near-optimal but over the course of the game they reduced their investment rate by almost a factor of 2, well below optimal. The pattern of failure suggests that players suboptimality is a response to trial to trial variability. Joint work with Esther Wi, Keiji Ota, Lilly Li, and Tessa Decker

Seminar hosted by Marco Bertamini.

Biosketch Laurence T. Maloney
Department of Psychology and Center for Neural Science – New York University
Prof. Maloney earned a BA in Mathematics from Yale University, an MS in Mathematical Statistics, and a PhD in Psychology (1985) from Stanford University. His research bridges psychology, neuroscience, and decision theory, focusing on how humans perceive, plan, and act under uncertainty. Maloney is known for applying mathematical and statistical models to perceptual and decision-making processes, encompassing vision, color perception, and sensorimotor coordination. His work has significantly contributed to the development of visual perception modeling, color constancy, and neuroeconomics. Maloney’s distinctions include the Troland Award from the National Academy of Sciences, the Humboldt Research Prize, and fellowships from Fulbright and Guggenheim foundations. He has held visiting positions at several European universities, including Freiburg, Giessen, Paris, and Padova.