The adaptive combo of human cognitive biases

抄録

Human beings have been shown to have many kinds of cognitive limits and biases. We generally cannot optimize but just satisfice. Our valuation of an object or option are not absolute but comparative or relative to the others. We have contrasting risk attitude for gain and loss situation. In 2-armed bandit problems, we show that the three limits or biases can, when combined appropriately, work adaptively, actually optimally, and help us to overcome some tradeoffs.