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Workshop: Workshop on Human and Machine Decisions

Catastrophe, Compounding & Consistency in Choice

Christopher Gagne · Peter Dayan


Measures such as conditional value-at-risk (CVaR) precisely characterize the influence that rare, catastrophic, events can exert over decisions. CVaR compounds in complex ways over sequences of decisions -- by averaging out or multiplying -- formalized in recent work [1] as three structurally different approaches. Existing cognitive tasks fail to discriminate these approaches well; here, we provide examples that highlight their unique characteristics, and make formal links to temporal discounting for the two of the approaches that are time-consistent. These examples can serve as a basis for future experiments with the broader aim of characterizing (potentially maladaptive) risk attitudes in psychopathological populations.

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