Introduction to the special issue bridging behavioral decision theory and social psychology (original) (raw)
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Broadening behavioral decision research: Multiple levels of cognitive processing
Psychonomic Bulletin & Review, 1999
The area of behavioral decision research, specifically the work on heuristics and biases, has had a tremendous influence on basic research, applied research, and application over the last twenty-five years. Its unique juxtaposition against economics has provided important benefits, but at the cost of leaving it disconnected from too much of psychology. This paper explores an expanded definition of behavioral decision research through the consideration of multiple levels of cognitive processing. Rather than being limited to how decision-makers depart from optimality, we offer a broader analysis of how decision-makers define the decision problem and link decisions to goals, as well as a more detailed focus on processes associated with implementing decisions.
the dominant theoretical framework in the social sciences. The theory is enormously in¯uential. Yet despite its popularity, the theory is based on untenable assumptions about human nature. Decision makers, or omniscient agents with stable and well-de®ned tastes, satisfy internal consistency and coherence by making choices that maximize their expected utilities. Behavioral decision researchers have taken a descriptive approach to human decision making by exploring the actual judgments and decisions that people make as individuals, groups, and organizations. Researchers have identi®ed numerous ways in which people violate the assumptions of rationality. The ®eld has provided psychological insights about utilities and beliefs and has offered descriptive accounts of judgment and choice. This article discusses some of the empirical violations of rational choice theory, as well as alternative descriptive accounts of actual choices. Finally, it concludes with some comments about future directions.
The Psychology of Economic Decisions
The Journal of Socio-Economics, 2003
In this book the author provides an overview of the results of an economic psychology research project conducted, with colleagues and a collaborator (i.e. Paul Webley, Adrian Winnett and Craig Mackenzie), over some years about the birth and the development of
Essays on the neural basis of consumer choice
2008
spent numerous hours helping me conceptualize, present, and write this research. I appreciate all of his research and career guidance. Shawn helped significantly in editing this dissertation and in helping me position this paper within the greater decision-making literature. Debbie helped both in providing conceptual links to current marketing literature and with general career advice while I was applying for academic positions. John provided important insight and knowledge about current neuroeconomic research. Kathleen helped me with important theoretical insights for the dissertation and was available at all times to help me work through theory and research design. José's incredible knowledge of current work in neuroscience helped greatly and amazed me. Other faculty members in the University of Minnesota have provided me with support during my years in the program. Professor Paul Johnson introduced me to neuroscience research and has continued offer me support throughout the dissertation process. I could not have completed this line of research without his help. Professors Angus MacDonald, Chad Marsolek and Cheryl Olman and members of their labs helped train me in fMRI research and analysis without any expectation or hope that I could repay their help. Apostolos Georgopoulos has provided me with significant insights and support to continue this work after the dissertation is completed. ii I am indebted to many PhD students for their help. Marketing students Nelson, Jannine, Andrew, Noelle, Ji, and Jungkeun helped collect data. Allan, Sonia, Ashwani, Raghu, and Hakkyun provided me with much needed support during the dissertation process. Psychology students Lane Beckes, Vaughn Steele, and Kristen Haut helped collect fMRI data during my first study. Finally, I would like to thank my family and friends who supported me while I was in the PhD program. iii Abstract Economists often assume decision makers are hyper-rational agents with few limits to their cognitive capabilities. Sometimes labeled "Homo Economicus", these decision makers learn quickly, perform complex math, have endless information processing capacity, and are exceptionally rational (Thaler 2000). While these assumptions make it easier to model decision making behavior, they are demonstrably false. Decision makers calculate probabilities inaccurately (Allais 1953), dislike ambiguity (Ellsberg 1961), change behavior to avoid negative emotion (Luce, Bettman and Payne 2001), and are affected by the mere presence of alternatives that should be irrelevant to their decision (Huber, Payne and Puto 1982). These violations have led to the development of other models that are better at predicting what consumers actually do. Rank dependent utility theory (Quiggin 1981) took into account imperfect probabilistic calculations. A more recent version of this theory (Schmeidler 1989) extended the model to ambiguous decisions. Prospect theory's weighting function (Kahneman and Tversky 1979) also addressed people's imperfect probabilistic calculations while the theory's editing function accounted for some of the simplification strategies that decision makers use to overcome their cognitive limitations.
Ignorance or integration: the cognitive processes underlying choice behavior
Journal of Behavioral Decision Making, 2009
The fast-and-frugal heuristic framework assumes noncompensatory tools for human preferences (i.e., priority heuristic) and inferences (i.e., take the best heuristic). According to this framework, these heuristics predict choice behavior as well as model the cognitive processes underlying such behavior. The current paper presents two studies that juxtapose predictions derived from these two simple heuristics with alternative predictions derived from compensatory principles. Dependent measures that included reaction time, choice pattern, confidence level, and accuracy were better predicted by compensatory indices than by noncompensatory indices. These findings suggest that people do not rely on limited arguments only, but tend to integrate all acquired information into their choice processes. This tendency was replicated even when the experimental task facilitated the use of noncompensatory principles. We argue that the fast and frugal heuristics can predict the final outcome only under certain conditions, but even in these particular situations they are not applicable to the processes underlying choice behavior. An integrative model for choice behavior is proposed that better represents the data.
Consumer decisionmaking: insights from behavioral economics
2010
By understanding how suboptimal choices are made, behavioral economics has the potential to offer insights to improve consumers' financial decisions. 2 Banking and Community Perspectives F e d e r a l r e s e r v e B a n k o F d a l l a s Perspectives Banking and Community alfreda B. norman assistant vice President and Community development officer Federal reserve Bank of dallas The increased complexity of the financial markets has made it difficult for consumers to choose products that best serve their interests. Behavioral economists explore consumers' psychological process in making decisions, such as immediate gratification, overconfidence, inertia or a lack of cognitive ability to understand the costs and benefits of financial services. They use experiments to examine "irrational" behaviors that contribute to less-than-optimal outcomes. In April 2010, the Federal Reserve Bank of Dallas, in partnership with the University of Texas at Dallas, hosted a conference on behavioral economics research with particular focus on low-and moderate-income (LMI) consumers. This issue of Banking and Community Perspectives reviews the behavioral economics concepts presented at the conference and discusses application of the behavioral research findings to developing products, services and policies to help consumers make better financial decisions. ISSUE 3 2010