Optimal Allocation of Time in Risky Choices under Opportunity Costs

In economic decision-making there is a fundamental trade-off between deliberation time to make a good decision and opportunity costs of other rewarding activities. Recent theories analyzed how the optimal strategy of evidence accumulation for this problem depends on the environment. If the utility difference between two options is known a priori, deciders should accumulate evidence according to a drift-diffusion model with constant decision boundaries, if this difference is unknown beforehand collapsing boundaries should be used. Further, the exact position of the boundaries depends on the opportunity costs. However, little is known about whether people use these strategies adaptively. Here, we used a new data visualization to find signature patterns of behavior for optimal strategies. We then conducted two experiments, where participants rated and chose between risky lotteries, while we varied prior information and opportunity costs. We found that while participants were sensitive to opportunity costs, they failed to stop deliberation about their choices fast enough when no information about the utility difference of two lotteries was available. We discuss how this suboptimality can make participants spend too much time on problems where there is little to gain in real-world scenarios. Hence, whereas prior research focused on biases from utility maximization, we show that when taking opportunity costs into account, deciders can be too eager to maximize utility in an isolated choice problem.