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Economic irrationality is optimal during noisy decision making #MMPMID26929353
Tsetsos K; Moran R; Moreland J; Chater N; Usher M; Summerfield C
Proc Natl Acad Sci U S A 2016[Mar]; 113 (11): 3102-7 PMID26929353show ga
Healthy individuals appear to display inconsistent preferences, preferring A over B, B over C, and C over A. Inconsistent, intransitive preferences of this form are hallmark manifestations of irrational choice behavior and breach the very assumptions of economic theory. Nevertheless, the neurocognitive mechanisms that mediate the formation of intransitive preferences remain elusive. We show that intransitivity arises from a bottleneck mechanism that blocks the processing of momentarily less valuable information. Although this algorithm is by classical definitions suboptimal (permitting the loss of information), we theoretically and empirically demonstrate that it leads to better decisions when accuracy can be compromised by neural noise beyond the sensory stage. Thus, contrary to common belief, choice irrationality is a by-product of purposeful neural computations.