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A perspective on judgment and choice: Mapping bounded rationality
- American psychologist
, 2003
"... Early studies of intuitive judgment and decision making conducted with the late Amos Tversky are reviewed in the context of two related concepts: an analysis of accessibility, the ease with which thoughts come to mind; a distinction between effortless intuition and deliberate reasoning. Intuitive th ..."
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Cited by 416 (0 self)
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Early studies of intuitive judgment and decision making conducted with the late Amos Tversky are reviewed in the context of two related concepts: an analysis of accessibility, the ease with which thoughts come to mind; a distinction between effortless intuition and deliberate reasoning. Intuitive thoughts, like percepts, are highly accessible. Determinants and consequences of accessibility help explain the central results of prospect theory, framing effects, the heuristic process of attribute substitution, and the characteristic biases that result from the substitution of nonextensional for extensional attributes. Variations in the accessibility of rules explain the occasional corrections of intuitive judgments. The study of biases is compatible with a view of intuitive thinking and decision making as generally skilled and successful.
Risk as analysis and risk as feelings: Some thoughts about affect, reason, risk, and rationality
- Risk Analysis
, 2004
"... Modern theories in cognitive psychology and neuroscience indicate that there are two fundamental ways in which human beings comprehend risk. The “analytic system ” uses algorithms and normative rules, such as the probability calculus, formal logic, and risk assessment. It is relatively slow, effortf ..."
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Cited by 234 (12 self)
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Modern theories in cognitive psychology and neuroscience indicate that there are two fundamental ways in which human beings comprehend risk. The “analytic system ” uses algorithms and normative rules, such as the probability calculus, formal logic, and risk assessment. It is relatively slow, effortful, and requires conscious control. The “experiential system ” is intuitive, fast, mostly automatic, and not very accessible to conscious awareness. The experiential system enabled human beings to survive during their long period of evolution and remains today the most natural and most common way to respond to risk. It relies on images and associations, linked by experience to emotion and affect (a feeling that something is good or bad). This system represents risk as a feeling that tells us whether it’s safe to walk down this dark street or drink this strange-smelling water. Proponents of formal risk analysis tend to view affective responses to risk as irrational. Current wisdom disputes this view. The rational and the experiential systems operate in parallel and each seems to depend on the other for guidance. Studies have demonstrated that analytic reasoning cannot be effective unless it is guided by emotion and affect. Rational decision making requires proper integration of both modes of
Affective forecasting
- Advances in Experimental Social Psychology
, 2003
"... It must be troubling for the god who loves you To ponder how much happier you'd be today Had you been able to glimpse your many futures. —Dennis (2001, p. 72) Foreseeing the future is one of the most appealing of all psychic powers. Who has not dreamed of making millions by predicting which new ..."
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Cited by 169 (13 self)
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It must be troubling for the god who loves you To ponder how much happier you'd be today Had you been able to glimpse your many futures. —Dennis (2001, p. 72) Foreseeing the future is one of the most appealing of all psychic powers. Who has not dreamed of making millions by predicting which new offering on Wall Street will be the next Microsoft and whether the Red Sox or Phillies will win the World Series? Seeing into the future would bring many advantages other than fattening our wallets, such as eliminating all decisionmaking angst. Rather than worrying about whether we are best suited for a career as a lawyer or an interior designer, whether we should marry Sam or Harry, or whether we should buy our neighbor's 1992 Volvo, we could simply glance into our crystal balls and see how these various options would pan out. People do not have crystal balls, of course (at least not accurate ones) and thus must prognosticate as best they can, based on what they know in the present. There is a great deal of research on how people make predictions about the future, including decision making under uncertainty (e.g.,
Maps of bounded rationality: A perspective of intuitive judgement and choice.
- In T. Frangsmyr (Ed.), Nobel prizes 2002: Nobel prizes, presentations, biographies, & lectures (pp. 416–499). Stockholm: Almqvist & Wiksell Int..
, 2002
"... The work cited by the Nobel committee was done jointly with the late Amos Tversky during a long and unusually close collaboration. Together, we explored the psychology of intuitive beliefs and choices and examined their bounded rationality. This essay presents a current perspective on the three ma ..."
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Cited by 138 (1 self)
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The work cited by the Nobel committee was done jointly with the late Amos Tversky during a long and unusually close collaboration. Together, we explored the psychology of intuitive beliefs and choices and examined their bounded rationality. This essay presents a current perspective on the three major topics of our joint work: heuristics of judgment, risky choice, and framing effects. In all three domains we studied intuitionsthoughts and preferences that come to mind quickly and without much reflection. I review the older research and some recent developments in light of two ideas that have become central to social-cognitive psychology in the intervening decades: the notion that thoughts differ in a dimension of accessibility -some come to mind much more easily than others -and the distinction between intuitive and deliberate thought processes. Section 1 distinguishes two generic modes of cognitive function: an intuitive mode in which judgments and decisions are made automatically and rapidly, and a controlled mode, which is deliberate and slower. Section 2 describes the factors that determine the relative accessibility of different judgments and responses. Section 3 explains framing effects in terms of differential salience and accessibility. Section 4 relates prospect theory to the general * This essay revisits problems that Amos Tversky and I studied together many years ago, and continued to discuss in a conversation that spanned several decades.
Good day sunshine: Stock returns and the weather.
- Journal of Finance,
, 2003
"... Abstract Psychological evidence and casual intuition predict that sunny weather is associated with upbeat mood. This paper examines the relation between morning sunshine at a country's leading stock exchange and market index stock returns that day at 26 stock exchanges internationally from 198 ..."
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Cited by 135 (4 self)
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Abstract Psychological evidence and casual intuition predict that sunny weather is associated with upbeat mood. This paper examines the relation between morning sunshine at a country's leading stock exchange and market index stock returns that day at 26 stock exchanges internationally from 1982-97. Sunshine is strongly significantly correlated with daily stock returns. After controlling for sunshine, rain and snow are unrelated to returns. There were positive net-of-transaction costs profits to be made from substantial use of weather-based strategies, but the magnitude of the gains was fairly modest. These findings are difficult to reconcile with fully rational price-setting.
The Priority Heuristic: Making Choices without Trade-Offs
- Psychological Review
, 2006
"... Bernoulli’s framework of expected utility serves as a model for various psychological processes, including motivation, moral sense, attitudes, and decision making. To account for evidence at variance with expected utility, the authors generalize the framework of fast and frugal heuristics from infer ..."
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Cited by 97 (12 self)
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Bernoulli’s framework of expected utility serves as a model for various psychological processes, including motivation, moral sense, attitudes, and decision making. To account for evidence at variance with expected utility, the authors generalize the framework of fast and frugal heuristics from inferences to preferences. The priority heuristic predicts (a) the Allais paradox, (b) risk aversion for gains if probabilities are high, (c) risk seeking for gains if probabilities are low (e.g., lottery tickets), (d) risk aversion for losses if probabilities are low (e.g., buying insurance), (e) risk seeking for losses if probabilities are high, (f) the certainty effect, (g) the possibility effect, and (h) intransitivities. The authors test how accurately the heuristic predicts people’s choices, compared with previously proposed heuristics and 3 modifications of expected utility theory: security-potential/aspiration theory, transfer-of-attentionexchange model, and cumulative prospect theory.
Decisions and Revisions: The Affective Forecasting of Changeable Outcomes
- Journal of Personality and Social Psychology
, 2002
"... People prefer to make changeable decisions rather than unchangeable decisions because they do not realize that they may be more satisfied with the latter. Photography students believed that having the opportunity to change their minds about which prints to keep would not influence their liking of th ..."
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Cited by 56 (6 self)
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People prefer to make changeable decisions rather than unchangeable decisions because they do not realize that they may be more satisfied with the latter. Photography students believed that having the opportunity to change their minds about which prints to keep would not influence their liking of the prints. However, those who had the opportunity to change their minds liked their prints less than those who did not (Study 1). Although the opportunity to change their minds impaired the postdecisional processes that normally promote satisfaction (Study 2a), most participants wanted to have that opportunity (Study 2b). The results demonstrate that errors in affective forecasting can lead people to behave in ways that do not optimize their happiness and well-being. In a minute there is time For decisions and revisions which a minute will reverse. —T. S. Eliot, Poetry (Vol. 6)
Value from hedonic experience and engagement
- Psychological Review
, 2006
"... Recognizing that value involves experiencing pleasure or pain is critical to understanding the psychology of value. But hedonic experience is not enough. I propose that it is also necessary to recognize that strength of engagement can contribute to experienced value through its contribution to the e ..."
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Cited by 50 (6 self)
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Recognizing that value involves experiencing pleasure or pain is critical to understanding the psychology of value. But hedonic experience is not enough. I propose that it is also necessary to recognize that strength of engagement can contribute to experienced value through its contribution to the experience of motivational force—an experience of the intensity of the force of attraction to or repulsion from the value target. The subjective pleasure/pain properties of a value target influence strength of engagement, but factors separate from the hedonic properties of the value target also influence engagement strength and thus contribute to the experience of attraction or repulsion. These additional sources of engagement strength include opposition to interfering forces, overcoming personal resistance, using the right or proper means of goal pursuit, and regulatory fit between the orientation and manner of goal pursuit. Implications of the contribution of engagement strength to value are discussed for judgment and decision making, persuasion, and emotional experiences.
An episodic process model of affective influences on performance
- Journal of Applied Psychology
, 2005
"... An episodic process model of affective ..."
