01.10.2013 (Tuesday)

Unconsciously rational: optimal strategies in human mental searches in online auctions

Regular Seminar Andrea Baronchelli (City University London)

at:
16:00 City U.
room CG05
abstract:

Characterizing how we explore abstract spaces is key to understand our (ir)rational behavior and decision making. While some light has been shed on the navigation of semantic networks, however, little is known about the mental exploration of metric spaces, such as the one dimensional line of numbers, prices, etc. Here we address this issue by investigating the behavior of users exploring the ôbid spaceö in online auctions. We find that they systematically perform LÚvy flights, i.e., random walks whose step lengths follow a power-law distribution. Interestingly, this is the best strategy that can be adopted by a random searcher looking for a target in an unknown environment, and has been observed in the foraging patterns of many species. In the case of online auctions, we measure the power-law scaling over several decades, providing the neatest observation of LÚvy flights reported so far. We also show that the histogram describing single individual exponents is well peaked, pointing out the existence of an almost universal behaviour. Furthermore, a simple model reveals that the observed exponents are nearly optimal, and represent a Nash equilibrium. We rationalize these findings through a simple evolutionary process, showing that the observed behavior is robust against invasion of alternative strategies. Our results show that humans share with the other animals universal patterns in general searching processes, and raise fundamental issues in cognitive, behavioural and evolutionary sciences.