Proceedings of the Annual Meeting of the Cognitive Science Society

A wealth of experimental evidence shows that, contrary to normative models of choice, people’s preferences are markedlyswayed by the context in which options are presented. In this work, we present the first resource-rational, mechanisticaccount of the decoy effect—a major contextual effect in risky decision making. Our model additionally explains a related,well-known behavioral departure from expected utility theory: violation of betweenness. We demonstrate that, contrary towidely held views, these effects can be accounted for by a variant of normative expected-utility maximization—sample-based expected utility model (SbEU; Nobandegani et al., 2018)—which acknowledges cognitive limitations. Our work isconsistent with two empirically well-supported hypotheses: (i) In probabilistic reasoning and judgment, a cognitive sys-tem accumulates information through sampling, and (ii) People engage in pairwise comparisons when choosing betweenmultiple alternatives.