Behavioral Economics for Human-in-the-loop Control Systems Design: Overconfidence and the hot hand fallacy

TL;DR

This paper explores how behavioral biases like overconfidence and the hot hand fallacy influence human decision-making in UAV control tasks, highlighting the importance of incorporating behavioral insights into control system design.

Contribution

It introduces an experimental framework linking behavioral economics with control engineering, revealing biases in human-in-the-loop UAV control under risk and feedback.

Findings

Humans exhibit overconfidence and conservatism in UAV control.

Participants misinterpret random sequences due to the hot hand fallacy.

Behavioral biases persist despite immediate feedback.

Abstract

Successful design of human-in-the-loop control systems requires appropriate models for human decision makers. Whilst most paradigms adopted in the control systems literature hide the (limited) decision capability of humans, in behavioral economics individual decision making and optimization processes are well-known to be affected by perceptual and behavioral biases. Our goal is to enrich control engineering with some insights from behavioral economics research through exposing such biases in control-relevant settings. This paper addresses the following two key questions: 1) How do behavioral biases affect decision making? 2) What is the role played by feedback in human-in-the-loop control systems? Our experimental framework shows how individuals behave when faced with the task of piloting an UAV under risk and uncertainty, paralleling a real-world decision-making scenario. Our findings support the notion of humans in Cyberphysical Systems underlying behavioral biases regardless of -- or even because of -- receiving immediate outcome feedback. We observe substantial shares of drone controllers to act inefficiently through either flying excessively (overconfident) or overly conservatively (underconfident). Furthermore, we observe human-controllers to self-servingly misinterpret random sequences through being subject to a "hot hand fallacy". We advise control engineers to mind the human component in order not to compromise technological accomplishments through human issues.