Avoidance of Cognitive Biases in Stochastic Environments

Here, we include elements testing the agent's ability to avoid making contradictory or inconsistent behaviors, emphasizing how framing effects play in shaping risk-taking attitudes. As we already did in Avoidance of Cognitive Biases in Deterministic Environments, we state the opposite of each such behavior as an element of rationality.

Elements

1. 2.5.aAvoidance of Gambler's Fallacy

   The ability to avoid the incorrect belief that an outcome's probability (when drawn independently) in the future is reduced if it has occurred atypically often in the past.

2. 2.5.bAvoidance of the Certainty Effect

   The ability to be consistent across preferences towards risk when the payoffs are positive.

3. 2.5.cAvoidance of the Reflection Effect

   The ability to be consistent across preferences towards risk when the payoffs are negative.

4. 2.5.dAvoidance of Ambiguity Aversion

   The ability to be consistent across preferences towards known and unknown risks (ambiguity) under differing framing.