Abstract not found

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.

The authors propose that people adopt others ’ perspectives by serially adjusting from their own. As predicted, estimates of others ’ perceptions were consistent with one’s own but differed in a manner consistent with serial adjustment (Study 1). Participants were slower to indicate that another’s perception would be different from—rather than similar to—their own (Study 2). Egocentric biases increased under time pressure (Study 2) and decreased with accuracy incentives (Study 3). Egocentric biases also increased when participants were more inclined to accept plausible values encountered early in the adjustment process than when inclined to reject them (Study 4). Finally, adjustments tend to be insufficient, in part, because people stop adjusting once a plausible estimate is reached (Study 5). We have endeavored to show... that thought in the child is egocentric, i.e., that the child thinks for himself without troubling to make himself understood nor to place himself at the other person’s point of view.... If this be the case, we must expect childish reasoning to differ very considerably from ours, to be deductive and above all less rigorous. (Piaget, 1959, p. 1) Children view their perceptions of the world as accurate reflections

Several studies propose that exemplar retrieval contributes to multi-attribute decisions. The authors have proposed a process theory enabling a priori predictions of what cognitive representations people use as input to their judgment process (Sigma, for “summation”; P. Juslin, L. Karlsson, & H. Olsson, 2008). According to Sigma, exemplar retrieval is a back-up system when the task does not allow for additive and linear abstraction and integration of cue-criterion knowledge (e.g., when the task is non-additive). An important question is to what extent such shifts occur spontaneously as part of automatic procedures, such as error-minimization with the Delta rule, or if they are controlled strategy shifts contingent on the ability to identify a sufficiently successful judgment strategy. In this article data are reviewed that demonstrate a shift between exemplar memory and cue abstraction, as well as data where the expected shift does not occur. In contrast to a common assumption of previous models, these results suggest a controlled and contingent strategy shift. Keywords: exemplar memory, cue abstraction, strategy shifts, multi-attribute decisions, Sigma. 1

”Expert judgments have been worse than those of the simplest statistical models in virtually all domains that have been studied” (Camerer and Johnson, 1991) “In nearly every study of experts carried out within the judgment and decision-making approach, experience has been shown to be unrelated to the empirical accuracy of expert judgments”

There is a widespread belief in financial markets that trends in prices are arrested at support and resistance levels that are to some degree predictable from the past behaviour of the price series. Here we examine whether ratios of the length and duration of successive price trends in the Dow Jones Industrial Average cluster around round fractions or Fibonacci ratios. We identify turning points by heuristics similar to those used in business cycle analysis, and test for clustering using a block bootstrap procedure. A few significant ratios appear, but no more than would be expected by chance given the large number of tests we conduct.

One of the most intriguing questions in insurance is the preference of consumers to buy low or no deductible insurance policies. This stands in sharp contrast to the theorem, proved by Mossin, 1968, that when the price of insurance is higher than its actuarial value, then under quite reasonable assumptions full coverage is not optimal. We show in a set of experiments that amateur subjects tend to underestimate the value of a policy with a deductible and that the degree of underestimation depends on the level of the deductible, and that professionals in the field of insurance are less prone to such biases. This implies that a policy with a deductible priced according to the true expected payments may seem “overpriced ” to the insured and therefore may not be purchased. Since the values of full coverage policies are not underestimated the insured may find them as relatively better “deals”.3 An Experimental Study of the Full-Coverage Puzzle I.

Assigning subjective probabilities to event trees: Partition dependence and bias toward the ignorance prior

The present paper tests the widely accepted hypothesis that on-line judgment implies functional independence between memory for, and judgment of, verbal stimuli (e.g., Anderson, 1989; Hastie & Park, 1986). In the present study, participants recalled lists of words, after having assessed each for its pleasantness. Presentation position of a negative item within the lists was manipulated. Also, items memorability was manipulated after their presentation – by inserting a filled delay between presentation and the judgment task; in this way, on-line judgment formation was spared. The memory manipulation reduced recall rates for negative items presented in the last position – and their negative influence on pleasantness ratings accordingly. These results contradict the predictions of pure on-line approaches to judgment formation (e.g., Betsch, Plessner, Schwieren, & Gütig, 2001) and suggest that even in on-line judgment tasks, memory plays a role.

Anchoring is a well-known effect leading to bias in estimation in various decision-making contexts. A question, however, is whether individuals with greater numerical and academic ability would be less prone to this effect than others because of greater ability to discern the value being estimated. In light of growing interest in the role of individual differences in bias susceptibility, anchoring was examined in a simulated pokerlike card game, using people with varying levels of academic achievement and psychometric reasoning scores. The results showed that anchoring susceptibility was unrelated to education levels, but negatively associated with numerical reasoning and cognitive reflection scores. This result, however, was mediated by task expertise because participants with higher cognitive abilities were those more likely to display improvements in anchoring performance over the course of the experiment.