Journal of Behavioral Decision Making

Many decisions involve a degree of personal control over event outcomes, which is exerted through one's knowledge or skill. In three experiments we investigated differences in decision making between prospects based on a) the outcome of random events and b) the outcome of events characterized by control. In Experiment 1, participants estimated certainty equivalents (CEs) for bets based on either random events or the correctness of their answers to U.S. state population questions across the probability spectrum. In Experiment 2, participants estimated CEs for bets based on random events, answers to U.S. state population questions, or answers to questions about 2007 NCAA football game results. Experiment 3 extended the same procedure as Experiment 1 using a within-subjects design. We modeled data from all experiments in a prospect theory framework to establish psychological mechanisms underlying decision behavior. Participants weighted the probabilities associated with bets characterized by control so as to reflect greater risk attractiveness relative to bets based on random events, as evidenced by more elevated weighting functions under conditions of control. This research elucidates possible cognitive mechanisms behind increased risk taking for decisions characterized by control, and implications for various literatures are discussed.

Despite evidence that individual differences in numeracy affect judgment and decision making, the precise mechanisms underlying how such differences produce biases and fallacies remain unclear. Numeracy scales have been developed without sufficient theoretical grounding, and their relation to other cognitive tasks that assess numerical reasoning, such as the Cognitive Reflection Test (CRT), has been debated. In studies conducted in Brazil and in the USA, we administered an objective Numeracy Scale (NS), Subjective Numeracy Scale (SNS), and the CRT to assess whether they measured similar constructs. The Rational-Experiential Inventory, inhibition (go/no-go task), and intelligence were also investigated. By examining factor solutions along with frequent errors for questions that loaded on each factor, we characterized different types of processing captured by different items on these scales. We also tested the predictive power of these factors to account for biases and fallacies in probability judgments. In the first study, 259 Brazilian undergraduates were tested on the conjunction and disjunction fallacies. In the second study, 190 American undergraduates responded to a ratio-bias task. Across the different samples, the results were remarkably similar. The results indicated that the CRT is not just another numeracy scale, that objective and subjective numeracy scales do not measure an identical construct, and that different aspects of numeracy predict different biases and fallacies. Dimensions of numeracy included computational skills such as multiplying, proportional reasoning, mindless or verbatim matching, metacognitive monitoring, and understanding the gist of relative magnitude, consistent with dual-process theories such as fuzzy-trace theory.

Performance on complex decision-making tasks may depend on a multitude of processes. Two such tasks, the Iowa Gambling Task (IGT) and Balloon Analog Risk Task (BART), are of particular interest because they are associated with real world risky behavior, including illegal drug use. We used cognitive models to disentangle underlying processes in both tasks. Whereas behavioral measures from the IGT and BART were uncorrelated, cognitive models revealed two reliable cross-task associations. Results suggest that the tasks similarly measure loss aversion and decision-consistency processes, but not necessarily the same learning process. Additionally, substance-using individuals (and especially stimulant users) performed worse on the IGT than healthy controls did, and this pattern could be explained by reduced decision consistency.

Financial decisions about investing and saving for retirement are increasingly complex, requiring financial knowledge and confidence in that knowledge. Few studies have examined whether direct assessments of individuals' confidence are related to the outcomes of their financial decisions. Here, we analyzed data from a national sample recruited through RAND's American Life Panel (ALP), an internet panel of U.S. adults aged 18 to 88. We examined the relationship of confidence with self-reported and actual financial decisions, using four different tasks, each performed by overlapping samples of ALP participants. The four tasks were designed by different researchers for different purposes, using different methods to assess confidence. Yet, measures of confidence were correlated across tasks, and results were consistent across methodologies. Confidence and knowledge showed only modest positive correlations. However, even after controlling for actual knowledge, individuals with greater confidence were more likely to report financial planning for retirement and to successfully minimize fees on a hypothetical investment task. Implications for the role of confidence (even if it is unjustified) in investment behavior is discussed.

Delayed rewards are less valuable than immediate rewards. This well-established finding has focused almost entirely on individual outcomes. However, are delayed rewards similarly discounted if they are shared by a group? The current article reports on three experiments exploring the effect of group context on delay discounting. Results indicate that discount rates of individual and group rewards were highly correlated, but that respondents were more willing to wait (decreased discounting) for shared outcomes than for individual outcomes. An explanatory model is proposed suggesting that decreased discount rates in group contexts may be due to the way the effects of both delay and social discounting are combined. That is, in a group context, a person values both a future reward (discounted by delay) and a present reward to another person (discounted by the social distance between them). The results are explained by a combined discount function containing a delay factor and a factor representing the social distance between the decision maker and group members. Practical implications of the fact that shared consequences can increase individual self-control are also discussed.

Most theories of motivation and behavior (and lay intuitions alike) consider pain and effort to be deterrents. In contrast to this widely held view, we provide evidence that the prospect of enduring pain and exerting effort for a prosocial cause can promote contributions to the cause. Specifically, we show that willingness to contribute to a charitable or collective cause increases when the contribution process is expected to be painful and effortful rather than easy and enjoyable. Across five experiments, we document this "martyrdom effect," show that the observed patterns defy standard economic and psychological accounts, and identify a mediator and moderator of the effect. Experiment 1 showed that people are willing to donate more to charity when they anticipate having to suffer to raise money. Experiment 2 extended these findings to a non-charity laboratory context that involved real money and actual pain. Experiment 3 demonstrated that the martyrdom effect is not the result of an attribute substitution strategy (whereby people use the amount of pain and effort involved in fundraising to determine donation worthiness). Experiment 4 showed that perceptions of meaningfulness partially mediate the martyrdom effect. Finally, Experiment 5 demonstrated that the nature of the prosocial cause moderates the martyrdom effect: the effect is strongest for causes associated with human suffering. We propose that anticipated pain and effort lead people to ascribe greater meaning to their contributions and to the experience of contributing, thereby motivating higher prosocial contributions. We conclude by considering some implications of this puzzling phenomenon. Copyright © 2011 John Wiley & Sons, Ltd.

We explored the potential for a sunk-cost effect in the realm of time. Questionnaire studies (Experiments 1-4) obtained a sunk-time effect that was robust to manipulations of prospective value, individual versus group consequences, and the effort or enjoyment inherent in the time. Behavioral experiments (Experiments 5-7) also suggested a sunk-time effect and found support for a personal responsibility by sunk cost interaction on choice behavior. We discuss theoretical implications and a potential connection to animal sunk cost phenomena.

We tested the effectiveness of prepayment for advice and aligned incentives as mechanisms for enhancing trust in unfamiliar advisers in decision-making under uncertainty. Participants were low-income Zimbabweans who played two rounds of the Monty Hall three-door game. In round 1, participants who purchased advice were significantly more likely to follow advice for how to win the game than were participants who received free advice. In round 2, the apparent effectiveness of advisers’ suggestions in round 1 moderated participants’ propensity to follow advice. If the round 1 advice appeared wrong, the credibility enhancing benefits of prepayment diminished. If the advice appeared right, the benefits of prepayment maintained. Hypotheses with regard to the benefits of aligned incentives received only weak support.

Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.

When deciding for whom to vote, voters should select the candidate they expect to best handle issues, all other things equal. A simple heuristic predicted that the candidate who is rated more favorably on a larger number of issues would win the popular vote. This was correct for nine out of ten U.S. presidential elections from 1972 to 2008. We then used simple linear regression to relate the incumbent's relative issue ratings to the actual two-party popular vote shares. The resulting model yielded out-of-sample forecasts that were competitive with those from the Iowa Electronic Markets and established quantitative models. The issue-index model has implications for political decision makers, as it can help to track campaigns and to decide which issues to focus on.

Rubinstein (1988, 2003) and Leland (1994, 1998, 2001, 2002) have shown that choices based on similarity judgments will account for the vast majority of observed violations of expected and discounted utility. In this paper, I show that such judgments also explain which equilibria will be selected in single-shot games with multiple equilibria, predict circumstances in which non-equilibria outcomes may predominate in such games, and predict circumstances in which specific pure strategy outcomes will predominate in games with no pure strategy equilibria.

Social norms play an important role in individual decision making. Bicchieri (2006) argues that two different expectations influence our choice to obey a norm: what we expect others to do (empirical expectations) and what we believe others think ought to be done (normative expectations). Little is known about the relative importance of these two types of expectation in individuals’ decisions, an issue that is particularly important when normative and empirical expectations are in conflict (e.g., high crime cities). In this paper, we report data from Dictator game experiments where we exogenously manipulate dictators’ expectations in the direction of either selfishness or fairness. When normative and empirical expectations are in conflict, we find that empirical expectations about other dictators’ choices significantly predict a dictator’s own choice. However, dictators’ expectations regarding what other dictators think should be done do not have a significant impact on their decisions. Our findings about the crucial influence of empirical expectations are important for those who design institutions or policies aimed at discouraging undesirable behavior.

Examination of search strategies has tended to focus on choices determined by decision makers' personal preferences among relevant cues, and not on learning cue-criterion relationships. We present an empirical and rational analysis of cue search for environments with objective criteria. In such environments, cues can be evaluated on the basis of three properties: validity (the probability that a cue identifies the correct choice if cue values differ between alternatives); discrimination rate (the proportion of occasions on which a cue has differing values); and success (the expected proportion of correct choices when only that cue can be used). Our experiments show that though there is a high degree of individual variability, success is a key determinant of search. Furthermore, a rational analysis demonstrates why success-directed search is the most adaptive strategy in many circumstances. Copyright © 2004 John Wiley & Sons, Ltd.

The necessity of retrieving complex attribute information from long-term memory has been shown to elevate processing costs and boost the use of simple decision heuristics. This effect was confined to verbal as opposed to pictorial attribute information. In a large-scale experiment (N = 151), either verbal or pictorial information for inferences had to be retrieved from long-term memory. Concurrent secondary tasks either interfered with the Central Executive, the Phonological Loop, or the Visuo-Spatial Sketchpad. These are hypothetical components of working memory responsible for processing different information formats. Whereas the information format massively affected strategy selection, there was an additive rather than interactive effect of secondary task, suggesting enhanced retrieval costs irrespective of the information format. An additional analysis in terms of a similarity match as proposed by exemplar-based models did not enhance the explanation of the data. Copyright © 2006 John Wiley & Sons, Ltd.

Goals are a ubiquitous part of life and have been shown to change behavior in many domains. This research studied the influence of goal attainment on risky choice behavior. Previous research has shown that goals tend to increase risk-seeking behavior when potential outcomes fall below a goal. We examined a new problem: Choice behavior when all potential outcomes in a choice set achieve or exceed the goal. Two studies show a “cushion effect” of goal attainment on choice under risk. When all possible outcomes of all options are above a salient and specific goal, decision makers are more likely to choose a risky option over a certain outcome with equal expected value (EV). We hypothesized that the attainment of a goal serves as a cushion that softens the negative emotions associated with receiving a gamble's low outcome. This allows risk taking that would otherwise be unattractive. Copyright © 2009 John Wiley & Sons, Ltd.

Koehler and Macchi 2009 criticize the experiments presented in Newell, Mitchell, and Hayes 2008 as being “virtually irrelevant” to exemplar cuing theory. This reply addresses that interpretation and argues that the experiments dealt with issues at the heart of the theory and provided evidence highly relevant to understand how people think about low-probability events. The role of the ‘target’ in probabilistic statements is examined, highlighting the need for further theoretical and empirical clarification of the concept. The remaining specific criticisms raised in the commentary are discussed as well. Copyright © 2009 John Wiley & Sons, Ltd.

In Glöckner, Betsch and Schindler (2010) we observed predecisional information distortions (coherence shifts) in probabilistic inferences that indicate bidirectional reasoning. In response to Marewski's (2010) critique, we explain why coherence shifts cannot be explained by currently specified fast and frugal heuristics (FFH). In contrast, parallel constraint satisfaction (PCS) models can easily account for such effects. We show that the PCS model used in the target paper is sufficiently well specified with respect to predicting the observed effects and demonstrate that it circumvents the problem of strategy selection by using a single-strategy approach. Taking a broader perspective, we argue that empirical and theoretical challenges to the FFH approach have become so substantial that a mere extension of the suggested toolbox might not sufficiently solve the problem. We suggest that further theoretical work in the field of judgment and decision making should be more responsive to well-established findings and insights from other fields of cognition such as memory and perception. Copyright © 2009 John Wiley & Sons, Ltd.

The ability to make advantageous decisions in the face of uncertainty is an essential human skill, yet the development of such abilities over the lifespan is still not well understood. In the current study, from childhood through older adulthood, we tracked the developmental trajectory of risk taking for gains and losses, and expected value (EV) sensitivity in risky choices. In the gain domain, risk-taking decreased consistently across the lifespan. In the loss domain, risk-taking was relatively constant across ages, a result we attribute to the pervasiveness of loss aversion. EV sensitivity showed an inverted-U-shaped function, increasing from childhood to adulthood but then decreasing for the elderly, which occurred for both risky gains and risky losses. This finding is consistent with neuropsychological and neuroanatomical evidence concerning the role of the frontal lobe in decision making, which is relatively late to develop during childhood but may degrade earlier in the later years. Copyright © 2010 John Wiley & Sons, Ltd.

Although previous studies investigated the relationship between general cognitive abilities and decision making, few have characterized specific cognitive abilities underlying decision-making competence. In this paper, we focus on executive functions—control processes involved in the regulation of cognition. Specifically, we report on an individual-differences study that investigated the relationship of executive functioning (EF) and general cognitive abilities (fluid intelligence and numeracy) with different aspects of decision-making competence. Individual differences in EF components explained aspects of decision-making competence even after controlling for fluid intelligence and numeracy. However, different aspects of decision-making competence varied in the extent to which they relied on different executive functions. In particular, resistance to framing effects, the ability to apply decision rules, and successful engagement in cognitive reflection partially depend on individual differences on the monitoring/inhibition dimension of EF. The ability to provide consistent judgments in risk perception is related to the shifting aspect of EF. The ability to recognize social norms and resistance to sunk costs were not significantly related to EF, thus supporting the idea that executive control is not a major determinant of these aspects of decision-making competence. Finally, substantial variance in some of the decision-making tasks remained unexplained, suggesting that other cognitive or non-cognitive abilities need to be considered in future studies. Copyright © 2011 John Wiley & Sons, Ltd.

This study evaluates the effect of forgone payoffs in decision-making tasks used for studying individual differences. We investigate whether the disclosure of forgone payoffs (defined as payoffs associated with un-chosen alternatives) has selective effects for drug abusers. Evidence suggests that drug abusers are hypersensitive to signals of positive reward. Accordingly, because the forgone payoffs of risky high-variability options include rewarding outcomes, this may create a distraction and lead drug abusers to make more risky choices. In a controlled experiment, we examined the behavior of high-functioning drug abusers and healthy controls using the Iowa gambling task. The results showed that in a forgone payoff condition, drug abusers made more risky choices. The results demonstrate that adding information about forgone payoffs can be useful for studying individual differences, and that studying individual differences can be valuable in evaluating the effects of forgone payoffs. Copyright © 2005 John Wiley & Sons, Ltd.

In this paper we test two hypotheses that stem from the work of Mellers, Chang, Birnbaum and Ordonez (1992). The first hypothesis is that in a binary gamble, the ratio of WTA to WTP is decreasing in the probability attached to a nonzero event. The second hypothesis is that this ratio is independent of the size of stakes. We find support for the first hypothesis, but mixed support for the second. The second hypothesis holds in the case of gains, but not in the case of losses. Copyright © 2001 John Wiley & Sons, Ltd.

Two studies are reported where people are asked to accept or not a price reduction on a target product. In the high (low) relative saving version, the regular price of the target product is low (high). In both versions, the absolute value of the price reduction is the same as well as the total of regular prices of planned purchases. As first reported by Tversky and Kahneman (1981), findings show that the majority of people accept the price discount in the high-relative saving version whereas the minority do it in the low one. In Study 1, findings show that the previous preference reversal disappears when planned purchases are strongly related. Also, a previously unreported preference reversal is found. The majority of people accept the price discount when the products are weakly related whereas the minority accept when the products are strongly related. In Study 2, findings show that the classic preference reversal disappears as a function of the comparative price format. Also, another previously unreported preference reversal is found. When the offered price reduction relates to a low-priced product, people are more inclined to accept it with a control than a minimal comparative price format. Findings reported in Studies 1 and 2 are interpreted in terms of mental accounting shifts. Copyright © 2002 John Wiley & Sons, Ltd.

Trust has been identified as a key ingredient to the prosperity of close relationships, organizations, and societies. While research mainly focused on the antecedents and consequences of trust, much less is known about how individuals assess whether there are enough reasons to warrant trustful action. Two experiments explored the how and when of this assessment, suggesting that antecedents may not only be integrated as content information per se (as generally assumed), but in a feeling-based summary form. Specifically, our results show that the ease or difficulty associated with the identification of antecedents to trust may guide trustful behavior. Furthermore, it is shown that such a feeling-based influence is particularly likely to occur in conditions of personal certainty. Together these results extend prior research in the domains of trust and economic games, and further attest to the fundamental role cognitive feelings play in social life. Copyright © 2010 John Wiley & Sons, Ltd.

Research on historical cases of policy decisions thought to involve groupthink nearly always has been qualitative, rather than quantitative. We propose that observable antecedents and consequences can be used to code incidents in a group's decision process, thereby providing the basis for more rigorous, quantitative analyses. As a first step toward such a quantitative case analysis, we coded statements from the investigative report on the space shuttle Challenger accident as positive or negative instances of the observable antecedents and consequences of groupthink. Positive instances of groupthink were twice as frequent as negative instances. More importantly, during the 24 hours prior to launch the ratio of positive to negative instances increased, then remained high. These results are consistent with the notion that the decision to launch the Challenger involved groupthink and provide a first step toward more rigorous quantitative analysis of historical or current decision processes.

Suppose an individual loses an irreplaceable object and someone else is at fault. How much should he be compensated? Normatively, compensation should equal the value (utility) to the victim. Our experiments demonstrate that compensation decisions often ignore value and are instead based on cost (how much the victim originally paid for the item) except when cost is zero. For example, we found that people awarded $200 for a destroyed item worth $500 to the victim if the cost was $200; however, they awarded $500 if the original cost was zero. We explain these phenomena in terms of lay scientism (the tendency to base decisions on objective factors) and discuss how the prevalent cost-based compensation rule hurts consumer welfare. Copyright © 2008 John Wiley & Sons, Ltd.

Recently, the ‘heuristics and biases’ approach to the study of decision making has been criticized, with a call for better integrated theory. Three experiments stemming from fuzzy-trace theory addressed information seeking on probability problems, and the cognitive representation of hit-rates, base-rates, and the contrapositive. As predicted by the fuzzy-trace principle of ‘denominator neglect’, many subjects exhibited ‘conversion errors’, confusing the hit-rate, P(A|B), with the answer, P(B|A). These subjects sought base-rates less often than other subjects. On causal problems, more subjects correctly represented base-rates, sought base-rates more often, and produced more accurate estimates than on non-causal problems. Subjects tutored on the meaning of the hit-rate sought the base-rate more often, and were more accurate than control subjects. Results are explained by fuzzy-trace theory principles of gist extraction, fuzzy processing preference, denominator neglect, and output interference.

The present study sought to describe police officers' decision processes in simulated counter-terrorism events. Based on previous phase models of decision making and existing police policy in dealing with critical incidents of this nature, a descriptive SAFE-T (Situation Assessment, Formulate a plan, Execute a plan and Team learning) model was applied to team decision processes. Proximity and Lag Sequential analyses tested the occurrence of the predicted decision phases set out in the model; these results indicated that the model did not fully capture the complexity of the process. Specifically, further qualitative analyses (and comparisons to a ‘Gold Standard’ set of subject matter expert decisions, conducted with the benefit of removing ambient and time pressure stressors) illustrated that a complex combination of ambient (uncertainty), cognitive (accountability pressures) and organizational (an existing blame culture and lack of policy) factors ‘derailed’ officers from making ‘save life’ decisions. Instead, albeit in a minority of cases, they either made errors of omission by failing to make any decision at all or inappropriate choice deferrals (by insisting another agency made the decision or that the decision could be made later). The potential benefits of making the SAFE-T decision process and how derailment can occur explicit in police critical incident training events are discussed. Copyright © 2010 John Wiley & Sons, Ltd.

This study assesses the impact of accountability, the status quo, and anticipated costs and benefits on judgement of the acceptability of a drug in the US pharmaceuticals market. Several effects are documented: (1) subjects were more accepting of a drug, the lower the anticipated risks of side effects and the greater the anticipated benefits; (2) subjects were especially unwilling to accept risk when the drug was not yet on the market and when they felt accountable for their decisions; (3) accountable subjects confronted by an off-the-market drug that posed moderate or high risk were also especially likely to procrastinate, to buckpass, and to think in integratively complex ways about the problem, notwithstanding the fact that many more lives would be saved than lost. We explain these results by positing that perceptual-cognitive processes (loss aversion) and political processes (blame avoidance) mutually reinforce each other when decision makers are accountable for choices that raise the possibility of changing the status quo in ways that impose losses on identifiable constituencies. We conclude by commenting on the complex normative issues that arise in labelling response tendencies as biases. Choices that look irrational within one ethical or political framework sometimes appear quite reasonable with another.

The sunk-cost effect, an irrational attention to non-recoverable past costs while making current decisions, has been documented widely in the domain of monetary costs. In this paper, I study the effect of past time investments on current decisions. In three experiments using choice situations, I demonstrate that the sunk-cost effect is not observed for past investments of time, but the effect reappears when the investments are expressed as monetary quantities. I further propose that this ‘pseudo-rationality’ is due to the fact that individuals lack the ability to account for time in the same way as they account for money. In two additional experiments, I facilitate the accounting of time and show that the irrational sunk-cost effect reappears. In a final experiment, I test my propositions in a setting where subjects make real investments of time and subsequently make real choices. Copyright © 2001 John Wiley & Sons, Ltd.

The effect of two types of justification pressure on the decision process was investigated. Three groups of 15 subjects each had to choose the head of a corrective home for criminal adolescents out of six candidates, who were described on 16 attributes. Two groups worked under justification pressure: subjects in the Accounting group were informed that they had to explain their decision afterwards, subjects in the Convincing group that they had to convince the other members of the executive board to vote for their selected candidate. From the third group, no justification was requested. It was found that justification pressure leads to a distinct increase in the amount of utilized information and to a more elaborate choice process, while the global decision heuristics do not seem to change. The two justification groups did not differ in the amount of information utilized, but the Convincing group employed a more elaborate process. This result shows that justification pressure is one of the task characteristics affecting the decision process, and proves that a latent justification pressure as assumed in some decision theories does not have the same effect as an explicit one. Copyright © 2001 John Wiley & Sons, Ltd.

The present research shows that the predictions and outcomes of mental-accounting tests depend on whether preferences are measured separately (one at a time) or jointly (comparatively). Across five studies, we show that joint evaluation weakens some decision biases (the theater ticket problem, the calculator and jacket problem), but exacerbates others (the basketball game problem). Joint evaluations serve as a check on whether people think the answers they give in separate evaluations make sense or require adjustment. We discuss how the findings impact (1) tests of mental accounting predictions (between vs. within subjects designs), and (2) the normative status of mental accounting. Copyright © 2008 John Wiley & Sons, Ltd.

Although mental accounting principles are generally robust, the integration-of-losses principle often fails. This research argues that when information salience is high, people actively segregate. To demonstrate that effect, this research uses purchase decision making for which the total payment is a key decision factor and compares examples such as the following equivalent total payments: “$120.95 for a stroller plus $19.95 for shipping” (i.e., segregation) versus “$140.90 for a stroller including shipping” (i.e., integration). Two studies demonstrate that integration increases purchase intentions when the salience of the smaller payment is higher. Specifically, integration leads to higher purchase intentions than does segregation when (1) the surcharge is visually more salient, (2) the surcharge is easy to process, and (3) price perceptions are stimulus instead of recall driven. Therefore, this research extends mental accounting by identifying conditions in which the integration-of-losses principle is likely to prevail. Copyright © 2006 John Wiley & Sons, Ltd.

In recent years, gasoline prices have spiked in response to world events, only to fall again within weeks or months. Anecdotal evidence suggests that these price fluctuations have a substantial impact on consumers' planned spending and their overall perceptions of financial well-being. We propose that consumers' behavioral intentions in response to these spikes are driven in part by how consumers mentally account for the fluctuations in gasoline prices. Specifically, we contend that people allocate sharp increases in the price per gallon of gasoline to a comprehensive mental account. As a result, such increases affect consumers' perceptions of their overall cost of living and have far-reaching effects on their planned spending. These predictions are tested in three experiments. The paper concludes with the discussion of a theoretical and applied implications of the results. Copyright © 2011 John Wiley & Sons, Ltd.

Analyses of multi-attribute decision problems are dominated by accounts which assume people select from a repertoire of cognitive strategies to make decisions. This paper explores an alternative account based on sequential sampling and evidence accumulation. Two experiments varied aspects of a decision environment to examine competing models of decision behavior. The results highlighted the intra-participant consistency but inter-participant differences in the amount of evidence considered in decisions. This pattern was best captured by a sequential evidence accumulation model (SEQ) which treated pure Take-The-Best (TTB) and pure “rational” (RAT) models as special cases of a single model. The SEQ model was also preferred by the minimum description length (MDL) criterion to a naive strategy-selection model (NSS) which assumed that TTB or RAT could be selected with some probability for each decision. Copyright © 2010 John Wiley & Sons, Ltd.

When a judgment task evokes unbiased estimates (i.e. the errors in individual judgments are distributed randomly around the true value), mathematical aggregation of individual estimates, even by a simple arithmetic mean, often will outperform all group members. However, when a task evokes biased estimates, mathematical aggregation does not perform so well. In this study, simulated data were accumulated to specify the expected' accuracy of mathematical aggregation relative to the accuracy of observed judgment of individual group members under varying conditions of task bias. Three types of judgment tasks were employed: (1) single-estimate, holistic tasks, (2) multiple-estimate, ranking tasks, and (3) multi-cue, decomposed tasks. Findings indicated across all task types that a large percentage of judgment-making group estimates formed strictly by computing the arithmetic mean of individual estimates performed better than their most capable members when a judgment task evoked little or no bias, a result particularly pronounced for ranking tasks. When the task was more greatly bias-evoking, a large percentage of parallel groups performed more poorly than average (or median) members, again a pattern more starkly evident for ranking tasks. These results suggest that the extent to which a judgment task evokes bias in a population of prospective group members is an important explanatory variable deserving much greater attention in the study of group performance. For example, an assertion about the efficacy of a particular group intervention based on a reliable demonstration of group performance as accurate as the most capable members may be unfounded when a task evokes no bias, since the baseline standard under such conditions should be much higher. By selecting tasks and populations that jointly produced highly biased estimates, researchers can lower the performance floor enough to detect (with reasonably small samples of groups) experimental effects should they occur.

We examine the accuracy of forecasts of the commercial potential of new product ideas by experts at an Inventor's Assistance Program (IAP). Each idea is evaluated in terms of 37 attributes or cues, which are subjectively rated and intuitively combined by an IAP expert to arrive at a forecast of the idea's commercialization prospects. Data regarding actual commercialization outcomes for 559 new product ideas were collected to examine the accuracy of the IAP forecasts. The intensive evaluation of each idea conducted by the IAP produces forecasts that accurately rank order the ideas in terms of their probability of commercialization. The focus of the evaluation process on case-specific evidence that distinguishes one idea from another, however, and the corresponding neglect of aggregate considerations such as the base rate (BR) and predictability of commercialization for new product ideas in general, yields forecasts that are systematically miscalibrated in terms of their correspondence to the actual probability of commercialization. Copyright © 2007 John Wiley & Sons, Ltd.

Although decision makers often consult other people's opinions to improve their decisions, they fail to do so optimally. One main obstacle to incorporating others' opinions efficiently is one's own opinion. We theorize that decision makers could improve their performance by suspending their own judgment. In three studies, participants used others' opinions to estimate uncertain quantities (the caloric value of foods). In the full-view condition, participants could form independent estimates prior to receiving others' opinions, whereas participants in the blindfold condition could not form prior opinions. We obtained an intriguing blindfold effect. In all studies, the blindfolded participants provided more accurate estimates than did the full-view participants. Several policy-capturing measures indicated that the advantage of the blindfolded participants was due to their unbiased weighting of others' opinions. The full-view participants, in contrast, adhered to their prior opinion and thus failed to exploit the information contained in others' opinions. Moreover, in all three studies, the blindfolded participants were not cognizant of their advantage and expressed less confidence in their estimates than did the full-view participants. The results are discussed in relation to theories of opinion revision and group decision making. Copyright © 2011 John Wiley & Sons, Ltd.

This paper examines the impact of accuracy feedback, effort feedback, and emphasis on either a goal of maximizing accuracy relative to effort or minimizing effort relative to accuracy on decision processes. Feedback on the accuracy of decisions leads to more normative-like processing of information and improved performance only in the most difficult problems, i.e., decisions with low dispersion in attribute weights. Explicit effort feedback has almost no impact on processing or performance. The impact of the goal manipulation on decision processes was found to be consistent with the shift in strategies predicted by an effort/accuracy model of strategy selection. In particular, a goal of emphasizing accuracy led to more normative-like processing, while emphasis on effort led to less extensive, more selective, and more attribute-based processing and poorer performance. These results provide perhaps the clearest evidence to date of the effect of goals on processing differences. Complex interactive relationships between types of feedback and goal structures suggest the need for additional study of feedback and goals on adaptive decision behavior.

In this study we compare the probability judgment accuracy of subjects from the United States and Turkey. Three different response modes were employed — numerical probabilities, pie diagrams, and odds. The questions employed in the study were restricted to two-alternative, general-knowledge items. The observed pattern of differences in the components of probability judgment accuracy paralleled those of studies that have compared Western and Asian subjects. In particular, Turkish subjects exhibited better discrimination but worse calibration than their US counterparts. This result persisted across all three response modes. These findings lend support to previous assertions that observed cross-national differences arise from socioeconomic rather than Asian versus Western cultural differences. However, the consistency of the observed differences across response modes refutes a previous assertion that observed cultural differences are merely the result of response bias.

A standard method for assessing whether people have appropriate internal representations of an event's likelihood is to check whether their subjective probability or frequency estimates for the event correspond with the assumed objective value for that event. When a person's estimate for the event exceeds its assumed objective probability or frequency, the person's expectancy for the event is concluded to be greater than warranted. This paper describes three lines of reasoning as to why conclusions of this sort can be problematic. Recently published findings as well as data from two new experiments are described to support this main thesis. The case of smoking risk is used to illustrate the more general problem, and issues that must be considered to avoid or contend with the problem are discussed. Copyright © 2002 John Wiley & Sons, Ltd.

This paper offers a unifying conceptual explanation for failures in competitive decision making across three seemingly unrelated tasks: the Monty Hall game (Nalebuff, 1987), the Acquiring a Company problem (Samuelson & Bazerman, 1985), and multiparty ultimatums (Messick, Moore, & Bazerman, 1997). We argue that the failures observed in these three tasks have a common root. Specifically, due to a limited focus of attention, competitive decision makers fail properly to consider all of the information needed to solve the problem correctly. Using protocol analyses, we show that competitive decision makers tend to focus on their own goals, often to the exclusion of the decisions of the other parties, the rules of the game, and the interaction among the parties in light of these rules. In addition, we show that the failure to consider these effects explains common decision failures across all three games. Finally, we suggest that this systematic focusing error in competitive contexts can serve to explain and improve our understanding of many additional, seemingly disparate, competitive decision-making failures. Copyright © 2003 John Wiley & Sons, Ltd.

Organizational acquisitions may be characterized by the degree of friendliness or hostility as well as the degree of autonomy or absorption of the organizations following the merger. This study examined judgments of fairness across four types of organizational acquisitions. Students read fictitious newspaper accounts of a university acquisition and rated their expectations and perceptions of fairness about possible changes. Results indicated that in an acquisition, both the procedures used and the outcomes provided influenced how fair the acquisition was perceived. As predicted, the relative importance of procedures and outcomes in overall perceptions of fairness shifted depending on the context of the acquisition. As the desirability of the acquisition increased, individuals placed greater importance on the procedural elements. In a friendly and low integration acquisition, the processes and outcomes became equally important. Individuals faced with a high integration acquisition expected more unfair changes and fewer fair changes to occur. Furthermore, these results highlight the importance expectations play in perceptions of fairness. The type of acquisition will influence expectations for fair treatment. Under less desirable conditions (hostile and high-integration mergers), organizations should take steps early in the process to manage fairness perceptions. Copyright © 2001 John Wiley & Sons, Ltd.

Intuitions relating to outcomes extended over time are examined. Utility integration is proposed as a normative rule for the evaluation of extended episodes. In Experiment 1, subjects explicitly compared aversive experiences of varying durations. By several measures, disutility was a marginally decreasing function of episode duration, even for experiences that were thought to become increasingly aversive. This pattern is a qualitative violation of the integration rule. In Experiment 2, subjects made global evaluations of a hypothetical person's aversive experiences, on the basis of a series of subjective ratings of discomfort made at periodic intervals. The results showed an extreme sensitivity to improving or deteriorating trend and a striking neglect of duration. The final moments of an extended episode appear to exert a strong influence on the overall judgment. This leads to violations of monotonicity when adding some moments of moderate pain reduces judgments of global aversiveness.

It has been asserted that (I) tests of expectancy-value models require within-persons analyses and that (2) within-persons analyses yield better predictions of behavioral tendencies than do across-persons analyses. The first assertion is correct; the second is not. Justification for within-persons tests of expectancy-value models must be made on theoretical rather than empirical grounds.

In three studies we examined the willingness to support action to remedy a public problem. In Study 1 and Study 2, people were asked whether they would financially contribute to solution of a public problem. In Study 3, people were asked whether they would sign a petition to support a public action. The aim was to test whether the willingness to support solution of a public problem is affected by the type of problem that is used as the referent. We hypothesized that the willingness to support a public action is lower when evaluated in the context of a high- as opposed to a low-importance referent problem (importance contrast effect). We also hypothesized that the importance contrast effect is tied to the perceived relatedness between the target and referent problems. The importance contrast effect should be found only when the two problems relate to different category domains. The findings bear out this prediction. Copyright © 2007 John Wiley & Sons, Ltd.

Two studies examined factors hypothesized to be related to the subjective perception of decision making. A total of 302 introductory psychology students read four hypothetical scenarios that varied on two dimensions: frequency of the behavior and whether the behavior was an action or an inaction (a 2 × 2 design). Subjects rated the scenarios on whether the actor made a decision. In Experiment 1, the frequency of behavior was unrelated to decision making. In addition, actions were given higher decision ratings than inactions in two scenarios, but lower ratings in the other two scenarios. In Experiment 2 the latter discrepancy was explained by ratings of whether the actor behaved thoughtfully rather than reflexively, in that these ratings mediated the action–decision rating relationship. Copyright © 2001 John Wiley & Sons, Ltd.

Entrapment occurs if people persist with losing courses of action. In two experiments, we show how elaborating social feedback (i.e., premature praise or forewarning regarding the chosen course of action) can have paradoxical effects on entrapment. The participants acted as head of a translation department and had to choose one out of four possible translation strategies for their employees. After choosing, they read four arguments (presumably written by former participants) which were either all in favor of the strategy chosen, all against it, or mixed. Half of the participants only read these arguments, whereas the other half elaborated on them by providing written comments (Experiment 1). The results showed that elaborating on other persons' arguments led to stronger entrapment, independently of whether the arguments were positive or negative. This pattern was due to biased argument processing: Whereas confirming thoughts were generated for positive arguments, negative arguments were refuted. Experiment 2 confirmed that this biased argument processing caused subsequent entrapment. These results indicate that elaborating any type of argument can lead to heightened entrapment and, hence, forewarning can backfire. Copyright © 2009 John Wiley & Sons, Ltd.

This research tests people's support for the “wait-and-see” approach in climate change due to the uncertainty in both the timing and probability of future consequences. In a laboratory experiment, carbon-tax consequences were presented to participants in one of two forms: a written description, where the probability, consequences, and timing were explicitly provided; and experience, where the probability, consequences, and timing were sampled through unlabeled buttons. Four problems were presented in each condition such that the probability of consequences was high or low and the timing was early or late. Results indicated that the proportion of wait-and-see choices was greater in experience than description. Furthermore, in both experience and description, the proportion of wait-and-see choices was greater when the probability was low rather than high. The difference in the proportion of wait-and-see choices between the low and high probability was amplified in experience and attenuated in description. Finally, there was no difference in the proportion of wait-and-see choices when the timing of climate consequences was early rather than late in both experience and description. These results are explained by people's risk and time preferences. Copyright © 2010 John Wiley & Sons, Ltd.