“If the present is very much like the past, then of course you would like to rely on what you have learned in the past to make the best possible decision,” he says Jörg spenkuchAssociate Professor of Directorates of Finance and Sciences at Kellogg School.
“But what happens when the environment changes. When we are in a new or unknown situation?” ask Yuval saladProfessor of Directorates of Finance and Sciences, also at Kellogg.
Student Salant, Spenkuch and PhD David Almog explored this question in the framework of the chess, a game where people are largely based on their memory to make a high degree, time -sensitive decisions.
They specifically examine how memory affected the opening of the players moves the first time they played the chess960, a variant of the traditional chess, where the initial seats in the rear row are mixed. When playing this modified version of the game, the players chose to use an opening move from their memory, the vast majority of time – even if it wasn’t the best move to hand.
The findings suggest that when we have to decide in unknown situations, our instincts to rely on memory generally intervenes in our desire to make the best decision. Economists refer to this phenomenon as a “memory premium”.
“Decision -making managers tend to choose options that can be recovered from memory from those that are not,” says Spenkuch, “even when decisions that are not in our memory are, in principle, better.”
A sweet spot
For their research, economists worked with the popular chess server on the internet, which hosts millions of standard chess games and thousands of chess960 games every day.
They received information about all the moves made on the server by individual players from January 2013 to June 2021 and reset about 150,000 players for the first time Chess960 with a historical playing traditional chess. The moves that an individual player had used at least once in traditional chess were thought to be part of his memory.
Chess960 includes the same board, pieces and rules such as traditional chess, but randomizes the initial positions of the pieces in the back row, making it very practical to memorize and develop opening sequences in the way that many players make for the standard chess. Without the heavy advantage of moving memory, players are encouraged to analyze the situation in real time.
In addition, Chess960 allowed researchers to objectively measure the quality of players’ decisions using sophisticated computer algorithms. This faced concerns that players could have chosen movements from their memory simply because they were better than those who were not in their memory.
Overall, these features gave the team an ideal environment to explore the influence of memory making decisions.
“We are thinking of chess as the sweet spot between a tightly controlled but somewhat abstract, unrealistic laboratory experiment and the making decisions in the wild, where we have to impose all kinds of heroic cases about what decision -making managers know, and we are trying to do.” “It is a controlled environment and real world data.”
The memory premium
After analyzing their large data, economists found that the people who played the chess960 for the first time used the opening movements from their memory about twice as often as the movements they had not played before. This happened even in cases where memory -based movements proved to be fair.
Salant, Spenkuch and Almog also confirmed that the memory premium in this chess environment reflects a lot the plans That psychologists and neuroscientists are linked to recovery of memory in the real world.
The characteristics of this behavior “are difficult to explain with anything other than memory,” says Salant.
Chess960 players, for example, were more likely to use movements they had used more recently and more often, while playing standardized chess – reflecting the easiest time people have recalled fresh or repeated experiences. Memory premium was also stronger when placing tracks on a chess960 boat looks more like the setting on the chess standard.
In addition, the newer memories appeared to disturb the recall of earlier memories. As people played more chess960 games, they became less dependent on their team’s move team to make their first move. After about 25 chess960 games, the memory premium was reduced by almost 50 %.
‘Good enough’
Collectively, the findings emphasize the fundamental role of memory in the way we make choices.
But why do we often turn the choices from our past, even when they are not ideal for our current situation? We may not know a better way to respond to the unknown situation and the memory -based is generally easier than finding the best possible decision in real time.
‘To find the potentially best boot moves [in Chess960] It would take time and effort and it is not clear that even if the decision -making managers tried, it would be successful every time, “says Spenkuch.
Another reason may be that we tend to make decisions based on the first choice that comes to mind, which, in many cases, can come from our memory.
“So if I see a new situation and a choice comes to mind. I wonder,” Is that good or not? “Spenkuch says.” If it looks like a pretty good choice, I get it. I don’t bother to think of more options. ”
Fortunately for decision-making managers, the researchers found that the players who chose the movements from their memory tend to perform a little better than those who did not-except for the most unknown situations.
‘These options [from memory] They are still quite far from the theoretical optimal, “says Spenkuch,” but finding the best move every time, this is probably too much to ask people. “
Avoiding accidents
Awareness of these trends can help us make more up -to -date decisions and avoid misfortunes when we find new situations, the researchers say. Uber’s global expansion offers a case.
The technology company that shares driving has found great success in many US cities entering the market without legal license, the public balloon of the public in this area and then over time, with local officials in negotiating agreements for the company to stay there.
So when Uber made the call expand to Germany, he decided to follow the same approach that he had worked for them so well before. She began offering her services in various cities, violating laws and regulations and then contacting local officials to win their support. But this time, the strategy fell. Uber was accused and sentenced to outrageous fines. Local officials, it is proven, had very little leverage in Germany and were unable to provide the company the protections it needed to grow. So Uber had to leave these cities until it forged the appropriate legal framework.
“When you project market entry into an environment for entry into the market in a different culture or geography, if you only rely on what you have done in the past, this can be reversed,” says Salant. “Not all purchases are created equal or similar.”
This does not mean that when we are confronted with a harsh decision, we have to give up entirely in our previous experiences. Uber found success using the same strategy in other markets, as well as many of the chess players who used the old opening movements for Chess960. But it is important to recognize that different situations may require different choices.
“Recovering memory is something that should work on average,” says Salant. “The surprise is that we continue to use this heuristic even when the situation is very different.”
