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Thermodynamics as a theory of decision-making with information-processing costs

2013

Article

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Perfectly rational decision-makers maximize expected utility, but crucially ignore the resource costs incurred when determining optimal actions. Here, we propose a thermodynamically inspired formalization of bounded rational decision-making where information processing is modelled as state changes in thermodynamic systems that can be quantified by differences in free energy. By optimizing a free energy, bounded rational decision-makers trade off expected utility gains and information-processing costs measured by the relative entropy. As a result, the bounded rational decision-making problem can be rephrased in terms of well-known variational principles from statistical physics. In the limit when computational costs are ignored, the maximum expected utility principle is recovered. We discuss links to existing decision-making frameworks and applications to human decision-making experiments that are at odds with expected utility theory. Since most of the mathematical machinery can be borrowed from statistical physics, the main contribution is to re-interpret the formalism of thermodynamic free-energy differences in terms of bounded rational decision-making and to discuss its relationship to human decision-making experiments.

Author(s): Ortega, PA and Braun, DA
Journal: Proceedings of the Royal Society of London A
Volume: 469
Number (issue): 2153
Pages: 1-18
Year: 2013
Month: May

Department(s): Empirical Inference
Bibtex Type: Article (article)

DOI: 10.1098/rspa.2012.0683

BibTex

@article{OrtegaB2013,
  title = {Thermodynamics as a theory of decision-making with information-processing costs},
  author = {Ortega, PA and Braun, DA},
  journal = {Proceedings of the Royal Society of London A},
  volume = {469},
  number = {2153},
  pages = {1-18},
  month = may,
  year = {2013},
  month_numeric = {5}
}