A Theory of Human Decisionmaking in Stochastic Estimation Tasks

Human decisionmaking in stochastic estimation tasks is considered. Theoretical and experimental results from mathematical psychology are reviewed. Concepts from stochastic estimation theory are used to develop a theory of human decisionmaking that employs optimal stochastic estimators with a short-term memory model, at least one long-term model, and a method of trading off estimates derived from each model. Approaches to testing the theory as well as the theory's implications are discussed. Also, the limitations of a linear theory are considered.