Forgone but not forgotten: the effects of partial and full feedback in “harsh” and “kind” environments

Abstract

In a perfect world, the choice of any course of action would lead to a satisfactory outcome, and we would obtain feedback about both our chosen course and those we have chosen to forgo. In reality, however, we often face harsh environments in which we can only minimize losses, and we receive impoverished feedback. In these studies, we examined how decision makers dealt with these challenges in a simple task in which we manipulated three features of the decision: The outcomes from the available options were either mostly positive or mostly negative (kind or harsh environment); feedback was either full or partial (outcomes revealed for all options or only for the chosen option); and for the final 20 trials in a sequence, participants either chose on each trial or set an “advance-directive” policy. The propensity to choose the better option was explained by several factors: Full feedback was more beneficial in harsh than in kind environments; policy decisions encouraged better decisions and ameliorated the adverse impact of a harsh environment; and beliefs about the value of strategy diversification predicted switch rates and choice quality. The results suggest a subtle interplay between bottom-up and top-down processes: Although harsh environments encourage poor choices, and some decision makers choose less well than others, this need not imply that the decision maker has failed to identify the better option.