Stopping Rule Selection Theory

Grand Valley State University, Allendale MI

Investigators

Abstract

In this project the Principal Investigator will develop a new theoretical framework for understanding stopping rules in decision making. The stopping rule is thought to be a crucial component of successful decision making. Over the years, several unconnected explanations have been proposed to account for some observed violations of optimal stopping rules. The current research proposes a unifying explanation for these violations based on a new stopping rule selection (SRS) theory. This theory is innovative in that it proceeds from the assumption that for any given decision problem, a decision maker draws from a large set of different kinds of decision strategies and stopping rules. The SRS theory hypothesizes that there is a storage area for stopping rules -- the so-called decision operative space (DOS) -- and a retrieval mechanism that is used to select stopping rules from the DOS. The SRS theory has shown good fit to some challenging data previously published in the relevant literature. The fits were achieved using pattern analysis, which is a novel approach based on fitting the relative frequency of observed data patterns to the predicted response patterns. In terms of broader impacts, the knowledge gained in the study should be useful to those who seek to develop or improve prescriptive decision aids. Decision aids are commonly employed to improve human performance in complex endeavors, including medicine, aviation, defense and business.