Personal History Affects Reference Points: A Case Study of Codeforces

Abstract

Humans make decisions based on their internal value function, and its shape is known to be distorted and biased around a point, which the research community of behavior economics refers to as the reference point. People intensify activities that come to lie within the reach of their reference point, and abstain from acts that would incur losses once they've crossed the point. However, the impact of past experiences on decision making around the reference point has not been well studied. By analyzing a long series of user-level decisions gathered from a competitive programming website, we find that history has a clear impact on user's decision making around the reference point. Past experiences can strengthen, and sometimes weaken, the decision bias around the reference point. Experiences of past difficulties can strengthen the tendency towards loss aversion after achieving the reference point. When a person crosses a reference point for the first time, the cognitive decision bias is significant. However, repeating this crossing gradually weakens the effect. We also show the value of our insights in the task of predicting user behavior. Prediction models incorporating our insights may be used for motivating people to remain more active.