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Rational Choice in an Uncertain World: The Psychology of Judgment and Decision Making (NULL) 2nd Edition, (Ebook PDF) full chapter instant download
Rational Choice in an Uncertain World: The Psychology of Judgment and Decision Making (NULL) 2nd Edition, (Ebook PDF) full chapter instant download
Rational Choice in an Uncertain World: The Psychology of Judgment and Decision Making (NULL) 2nd Edition, (Ebook PDF) full chapter instant download
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The Evolutionary Invisible Hand: The Problem Of
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Teresa Herlinger
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Contents
Preface
1. Thinking and Deciding
1.1 Decision Making Is a Skill
1.2 Thinking: Automatic and Controlled
1.3 The Computational Model of the Mind
1.4 Through Darkest Psychoanalytic Theory and Behaviorism to
Cognition
1.5 Quality of Choice: Rationality
1.6 The Invention of Modern Decision Theory
References
2. What Is Decision Making?
2.1 Definition of a Decision
2.2 Picturing Decisions
2.3 Decision Quality, Revisited
2.4 Incomplete Thinking: A Legal Example
2.5 Over-Inclusive Thinking: Sunk Costs
2.6 The Rationality of Considering Only the Future
2.7 The Rest of This Book
References
3. A General Framework for Judgment
3.1 A Conceptual Framework for Judgment and Prediction
3.2 Research With the Lens Model Framework
3.3 Capturing Judgment in Statistical Models
3.4 How Do Statistical Models Beat Human Judgment?
3.5 Practical Implications of the Surprising Success of the Linear
Model
3.6 Objections and Rebuttals
3.7 The Role of Judgment in Choices and Decisions
References
4. The Fundamental Judgment Strategy: Anchoring and Adjustment
4.1 Salient Values
4.2 Anchoring and (Insufficient) Adjustment
4.3 Anchoring on Ourselves
4.4 Anchoring the Past in the Present
References
5. Judging Heuristically
5.1 Going Beyond the Information Given
5.2 Estimating Frequencies and Probabilities
5.3 Availability of Memories
5.4 Biased Samples in Memory
5.5 Biased Sampling From Memory
5.6 Availability to the Imagination
5.7 From Availability to Probability and Causality
5.8 Judgment by Similarity: Same Old Things
5.9 Representative Thinking
5.10 The Ratio Rule
References
6. Explanation-Based Judgments
6.1 Everyone Likes a Good Story
6.2 The Conjunction Probability Error (Again)
6.3 Judging From Explanations
6.4 Legal Scenarios: The Best Story Wins in the Courtroom
6.5 Scenarios About Ourselves
6.6 Scenarios About the Unthinkable
6.7 Hindsight: Reconstructing the Past
6.8 Sometimes It’s Better to Forget
References
7. Chance and Cause
7.1 Misconceptions About Chance
7.2 Illusions of Control
7.3 Seeing Causal Structure Where It Isn’t
7.4 Regression Toward the Mean
7.5 Reflections on Our Inability to Accept Randomness
References
8. Thinking Rationally About Uncertainty
8.1 What to Do About the Biases
8.2 Getting Started Thinking in Terms of Probabilities
8.3 Comprehending the Situation Being Judged
8.4 Testing for Rationality
8.5 How to Think About Inverse Probabilities
8.6 Avoiding Subadditivity and Conjunction Errors
8.7 The Other Side of the Coin: The Probability of a Disjunction of
Events
8.8 Changing Our Minds: Bayes’s Theorem
8.9 Statistical Decision Theory
8.10 Concluding Comment on Rationality
References
9. Evaluating Consequences: Fundamental Preferences
9.1 What Good Is Happiness?
9.2 The Role of Emotions in Evaluations
9.3 The Value of Money
9.4 Decision Utility—Predicting What We Will Value
9.5 Constructing Values
References
10. From Preferences to Choices
10.1 Deliberate Choices Among Complex Alternatives
10.2 Ordering Alternatives
10.3 Grouping Alternatives
10.4 Choosing Unconsciously
10.5 How to Make Good Choices
References
11. A Rational Decision Theory
11.1 Formally Defining Rationality
11.2 Making Theories Understandable—The Axiomatic Method
11.3 Defining Rationality: Expected Utility Theory
11.4 Traditional Objections to the Axioms
11.5 The Shoulds and Dos of the System
11.6 Some Bum Raps for Decision Analysis
References
12. A Descriptive Decision Theory
12.1 Non-expected Utility Theories
12.2 Gain–Loss Framing Effects
12.3 Loss Aversion
12.4 Look to the Future
References
13. What’s Next? New Directions in Research on Judgment and
Decision Making
13.1 The Neuroscience of Decisions
13.2 Emotions in Decision Making
13.3 The Rise of Experimental Methods to Study Dynamic Decisions
13.4 Do We Really Know Where We’re Headed?
References
14. In Praise of Uncertainty
14.1 Uncertainty as Negative
14.2 The Illusion of Hedonic Certainty
14.3 The Price of Denying Uncertainty
14.4 Two Cheers for Uncertainty
14.5 Living With Uncertainty
References
The greatest enemy of truth is very often not the lie—deliberate, contrived, and dishonest—
but the myth—persistent, pervasive, and unrealistic.
—John F. Kennedy
I n this book, we present basic theories and research findings from the field
of judgment and decision making in as nontechnical a way as possible.
Students have liked this approach in the classroom, and we hope that
readers of this book will like it, too. We have been teaching this material for
more than 30 years to students at Carnegie Mellon University, University of
Chicago, University of Colorado, University of Oregon, Northwestern
University, and Harvard University. We have found that these courses are
more popular with students than any of the other topics that we teach.
A primary motivation for writing this book was our belief that an
understanding of the principles of rational decision making can help people
improve the quality of their choices and, thus, their lives. The material is
not only profound and fascinating; it is practically useful as well. Again,
students recognize this and have frequently told us, years after they
completed our courses, that what they learned has made a difference in their
everyday lives (a greater difference than knowing that their anterior
cingulate is part of the mesocortical system or that hebephrenic
schizophrenics are the silly ones).
The book is divided into six sections. Chapters 1 and 2 provide some
history and introduce the main themes of rational versus descriptive
approaches to judgment and decision making. Chapters 3 through 7 review
the psychology of judgment. Chapter 8 focuses on the accuracy and
rationality of our habits of judgment. Chapters 9 and 10 review what we
know about where our basic values come from and how we make choices
when there is little uncertainty about obtaining outcomes, but often much
uncertainty about how much we will like them. Chapters 11 and 12 review
the major theory of rational decision making, subjective expected utility
theory, and the major descriptive psychological theory, prospect theory.
Chapter 13 takes a look at cutting-edge research directions in the field. The
final chapter reviews our major themes and conclusions, with an
exhortation to appreciate the positive aspects of living with uncertainty.
Finally, the Appendix provides an introduction to the concepts from
mathematical probability theory that we rely on throughout the book.
We compare basic principles of rationality with actual behavior in
making decisions. There is a discrepancy. Moreover, this discrepancy is due
not to random errors or mistakes but to automatic and deliberate thought
processes that influence how decision problems are conceptualized and how
future possibilities in life are evaluated. The overarching argument is that
our thinking processes are limited in systematic ways, and we review
extensive behavioral research to support this conclusion.
We attempt to present as clearly and forcefully as possible the
implications of the research we describe. Subsequent research will
doubtless show that some of the conclusions reached in this book are
incorrect or that they require modification, but we take the position that
research—not anecdotes, not “plausible beliefs,” not common sense, and
not our everyday experience—should be the basis for understanding and
evaluating our decision-making achievements and defeats. Nevertheless, we
have used anecdotes as a teaching device. Over a combined experience of
more than 50 years of study and teaching, we have collected many
anecdotes that illustrate how our thinking about decision problems
systematically deviates from rationality.
The theme of limited cognitive capacity conflicts with our
preconceptions about how smart we are. While many of us are willing to
accept the idea that our unconscious (for Freud) or “animal” (for Plato and
Aristotle) or “hot-headed” natures may interfere with our reasoning, the
idea that thinking per se is a fundamentally flawed and limited process is an
unpleasant one. Moreover, many people reject the view that thinking is
flawed on the grounds that our dominant-species status on this planet is
related to our cerebral capacity, and evidenced by our technologically
advanced civilizations. This commonsense argument is flawed in several
respects.
First, although evolution is often phrased in terms of the “survival of the
fittest,” its actual mechanism is better described as “survival of the fitter.”
Animals that have a higher probability than their competitors of surviving
to adulthood and reproducing in a particular environment have a higher
probability of dispersing their genes to future generations. Successful
animals need not be optimal when compared with some physical or
mathematical criterion of optimality, but only “one-up” on competing
animals and their forebears. Even that comparative superiority is defined
relative to the particular demands and survival tasks of a specific
environment. If indeed the human cerebral cortex is responsible for our
ascendance over competing species, that does not imply it is the optimal
thinking device, just a slightly better one. Analogies between judgment and
vision systems are instructive in this regard. The vision system is not
designed to get the maximum amount of veridical information about the
environment into our heads. It is designed to get the right amount of
information into a mental representation to efficiently achieve our
navigation goals for survival and reproduction.
Second, our technological development does not attest to the brilliance of
our thinking as individual human beings. Rather, it is evidence for the
human ability to communicate knowledge, within and across generations. A
single human could not have created relativity theory, a symphony, or a
hydrogen bomb without building on knowledge borrowed and inherited
from living others and from the past. Such borrowing involves recognizing
what is useful—but recognizing a valuable intellectual result is far easier
than creating it. In contrast, when faced with an important decision in our
lives, we are often “on our own” to think through what we might do and the
probable consequences of the behaviors we might choose.
We must also counter the misconception that decision making is
important simply because of the vastness of the choices with which we as
individuals and as a species are faced today in the modern world. It is true
that few of our great-grandparents seriously considered the option of
divorce and that few of their political leaders considered risking the
annihilation of the human race in order to achieve an international political
objective. Nor were engineers of that day asked to produce energy by
constructing complex power plants that could poison vast areas of the earth
as a result of a single operator’s bad judgments (as at Chernobyl). But
despite the larger set of options available to us than to our ancestors, our
decisions are probably not more difficult than were theirs. We adapt to
whatever decisions must be made and to their consequences. Such
adaptation is both a blessing (as when an individual in the worst prison
camp can experience near ecstasy over eating a single crust of bread) and a
curse (as when people who appear to “have it made” adapt to their riches
and find themselves on an unsatisfying “hedonic treadmill”). The subjective
weight of decision making has always been a heavy one. The new
knowledge that underlies the field of decision making and this book is
knowledge about simple principles that define rationality in decision
making and scientific knowledge about our cognitive limits that lead us to
not decide rationally.
Now we offer a word about format. We have avoided footnotes;
subordinate explication and commentary has been incorporated into the
text. For the most part, page number citations in the text are not necessary,
as it is easy to identify the relevant material from the authors’ names alone.
We have attempted to rely on sources that discuss basic ideas in a
nontechnical manner. When we refer to material that is presented elsewhere
in this book, we provide section headings that point to a section within a
chapter (e.g., a reference to Section 3.4 points to material in the fourth
section within the third chapter).
We are intellectually and emotionally indebted to too many colleagues
and friends to dare list their names, for we would surely neglect someone
important and deserving. Our agent, Gerard McCauley, reluctantly accepted
our plea for help in navigating the shoals of the textbook publishing
business. We probably have no idea how much we owe to him. We would
like to thank Andrew Hastie for his excellent work in constructing the
graphics in this edition of the book and the Templeton Foundation for its
financial support.
—Reid Hastie and Robyn M. Dawes
1
Thinking and Deciding
Corrections
The first line indicates the original, the second the correction.
Contents to Vol. II
IX. ‘THOSE ARE THE KILLING GRIEFS WHICH DARE NOT SPEAK’ 138
IX. ‘THOSE ARE THE KILLING GRIEFS WHICH DARE NOT SPEAK’ 128
p. 137
p. 172
p. 268
p. 305
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