Abstract
Gilboa and Schmeidler's work demonstrates an important distinction between behavior as predicted by Expected Utility Theory and as predicted by Case Based Decision Theory: in the event of a posed similar, familiar decision, people will revert to their memories of past situations to determine their current course of action. The implications of their distinctions are interesting, since it suggests the presence of an inclination towards simplifying decisions. Whenever possible, we will attempt to reduce our behavioral choice options by comparing them to choices we have already made and this to me seems like a process designed to both save some cognitive energy and adopt what we have learned from the past.
