The simulation analysis of the hot stove effect in repeated-play decision making under ambiguity

The hot stove effect is a curious behavioural phenomenon, since behaviour predicted by the effect is irrational. Previous laboratory-based studies - without sacrificing theoretical rigor - has led to mixed conclusions with regard to the descriptive value of the hot stove effect. This paper presents Bayesian theoretical aspects of the effect, and provides a mathematical computer simulation of behavioural systems. The current results show that behaviour predicted by the effect is reasonable in certain settings.