Article

Judgment Under Uncertainty: Heuristics and Biases

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Abstract

Many decisions are based on beliefs concerning the likelihood of uncertain events such as the outcome of an election, the guilt of a defendant, or the future value of the dollar. Occasionally, beliefs concerning uncertain events are expressed in numerical form as odds or subjective probabilities. In general, the heuristics are quite useful, but sometimes they lead to severe and systematic errors. The subjective assessment of probability resembles the subjective assessment of physical quantities such as distance or size. These judgments are all based on data of limited validity, which are processed according to heuristic rules. However, the reliance on this rule leads to systematic errors in the estimation of distance. This chapter describes three heuristics that are employed in making judgments under uncertainty. The first is representativeness, which is usually employed when people are asked to judge the probability that an object or event belongs to a class or event. The second is the availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development, and the third is adjustment from an anchor, which is usually employed in numerical prediction when a relevant value is available.

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... Frequently, researchers will test participants' randomness perceptions by asking them to choose, from a set of sequences, which sequence they believe to be most or least random. Literature (e.g., Kahneman & Tversky, 1972;Tversky & Kahneman, 1974) has commonly found that participants tend to respond incorrectly, holding a non-normative view (overlooking independence of events) or reasoning incorrectly. In this paper, two questions that compare coin-toss sequences are analysed. ...
... 310). Hence, this indicated that some participants may have been using the representativeness heuristic (Kahneman & Tversky, 1972, 1974 despite getting the correct answer. ...
... This may mean that the participants' reasoning could represent possible use of alternative sample spaces although, as noted, it is difficult to truly understand the participants' underlying thinking around patterns. If alternative sample spaces were not used by the participants, it may be that the participants were reasoning heuristically (Tversky & Kahneman, 1974). For example, the participants' reasoning could have been influenced by the Gambler's fallacy, whereby the participants' "…estimate of the probability of tails on a particular toss increases with the number of consecutive heads that preceded that toss" (Tversky & Kahneman, 1974, p. 1130). ...
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This paper examines coin-toss comparison questions from two recent studies involving undergraduate students and high school teachers and connects to findings from two prior studies in the literature. Considering possible sample spaces employed by participants, this is a reflection on whether one sequence could be more likely depending on the interpretation of the question. To critique the choice of sequences and determine possible scenarios in which one sequence may be more likely than the other, three alternative sample spaces were explored. It was determined that different sample spaces can lead to one sequence being more likely to occur than the other. Further evaluation discusses whether alternative sample spaces may have been utilised by the participants in each of the studies, and hence, the paper concludes with an advocacy to enquire deeper into participants’ reasoning when investigating coin-toss questions.
... This research explains that the heuristic describes the placement of more weight on convenience. For example, a person may choose up-to-date information and ignore other relevant facts (Tversky and Kahneman, 1974;Stanovich et al., 2008;Toplak et al., 2011). This study links this heuristic bias with mental paths to reduce difficulty in carrying out tasks and achieve expected maximum outputs with simple actions. ...
... On the other hand, they played the online game starting as a weak player, which encouraged them to be heuristic to win future tournaments. Finally, they are conditionalised in their increasing cognitive biases (Tversky and Kahneman, 1974;Stanovich et al., 2008;Toplak et al., 2011). Accordingly, their mental biases regarding game addiction reduce their academic stress and replace them with playing the game, likely producing optimal outputs. ...
... Moreover, it recommends that these students could use the four remaining hours for their extra-curricular activities. Finally, this study demonstrates that these university students should not experience the problematic chaos of self-control (Goldiamond, 1965;Goldfried and Merbaum, 1973;Muraven, 2010), cognitive distortions (Tversky and Kahneman, 1974;Stanovich et al., 2008;Toplak et al., 2011), and opportunistic behaviours (Becker, 2007;Alzahrani et al., 2017), affecting their habits and addictions to playing games. In addition, these students would not have fallen into bad habits and become addicted to playing the games if these universities strictly applied academic regulations. ...
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Purpose This study investigates some extant research concentrating on student self-regulation to play online games addictively. Then, it proposes a new design to explain game addiction caused by students’ cognitive biases according to three contested approaches: self-control or self-regulation, cognitive distortion, and opportunistic behaviour. Moreover, it separates each contested approach in detail. Research methodology This research generalises research subjects with specific qualities and characteristics according to the researchers’ provisions. It selects the population with specific attributes: self-control, cognitive bias, opportunistic behaviour, habits and addiction to online games. Then, this study distributes bilingual questionnaires to the respondents throughout Indonesia. Finally, it tests these research hypotheses, splits them according to each model, and avoids perfect-collinearity among the constructs. Originality This research creates a new design incorporating three contested models of students’ addiction to games. The authors argue that online game addiction is due to students’ weak self-control, cognitive distortion, and opportunistic behaviours. The first perspective suggests that students play games addictively because of their low self-control in managing their tasks and enjoying leisure time. Secondly, this research deals with students playing the game due to their cognitive distortions: embodiment, stereotype, and heuristic biases. Finally, the third perspective explains students’ addiction to games because of their probable attitudes and behaviours: indeterminism, escapism, and adverse selection. Findings This research finds that each contested model could explain students’ tendencies to be addicted to playing online games. The authors conclude that multi-constructs and multi-dimensions explain students’ tendency to play games addictively in all three contested models. Moreover, this research infers that students’ habits and addictive behaviours are due to the number of games available on social media and the internet. This availability would likely damage academic habits, behaviours, culture and environment. Meanwhile, educational systems cannot stop the emergence and alterations of some new games. Finally, this study innovates the multi-paradigm for teachers’ counselling guidance. Implications This study’s findings imply a need for students’ behavioural therapy to be conducted by academic counsellors who are careful of the causal factors of multi-constructs and multi-dimensions. Then, it argues that the different causal factors impact the need for different cognitive therapies. Moreover, it explains that equal treatment for these students addicted to games would make them more stressed. Then, academic counsellors developing healing and wellness programmes should mitigate these students with a specific trait from the subdimensions of each construct.
... This is problematic as it has been shown that information overload can result in poorer decision making, reduced productivity, difficulties in sense-making and reasoning, poorer memory recall, or experiences of frustration, tiredness, stress, confusion and/or anxiety [Chewning and Harrell, 1990;Schick, Gordon, and Haka, 1990;Farhoomand and Drury, 2002;Benselin and Ragsdell, 2016;Jones and Kelly, 2018]. Moreover, the combination of these factors makes homicide investigators susceptible to cognitive biases, which may lead to investigators encountering the wellknown tunnel vision phenomenon [Tversky and Kahneman, 1974;Gruijter and Poot, 2019;Cao, 2008;Snook and Cullen, 2008;Goette, Han and Leung, 2019]. Tunnel vision could be problematic as it is connected to several investigative failures [Bronkhorst, 2014;]. ...
... It has been argued that our reasoning and decision-making capabilities are constrained due to the limitation of our human cognition [Kahneman and Tversky, 1973;Baddeley, 1992]. Therefore, to make reasonable decisions, with minimal cognitive effort, human cognition uses so-called cognitive heuristics, simple mental strategies used by individuals to deal with complex tasks and uncertain situations [Tversky and Kahneman, 1974;Lau and Redlawsk, 2001]. For example, heuristics allow us to focus on information that is relevant and ignore irrelevant information when confronted with IO [Gruijter and Poot, 2019]. ...
... For example, heuristics allow us to focus on information that is relevant and ignore irrelevant information when confronted with IO [Gruijter and Poot, 2019]. Cognitive heuristics can be very efficient and effective, but they might lead to severe and systemic errors, known as cognitive biases [Tversky and Kahneman, 1974]. In criminal investigations, tunnel vision is often linked to the use of these heuristics and the occurrence of cognitive biases. ...
Article
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In homicide investigations, the growing availability of data results in an increasing amount of information and Persons of Interest (PoIs) that can be collected and incorporated during an investigation. This might result in information overload and increased tunnel vision during a homicide investigation. In this paper, we designed a system to support homicide investigations in such a way that it reduces information overload and tunnel vision. For evaluation purposes, we built a prototype that was filled with a fictional homicide investigation. A user study indicated that criminal investigators experienced a significantly low level of information overload and tunnel vision using the prototype. Moreover, the results showed acceptable usability and verbal statements indicated a largely positive attitude towards the prototype. This research clearly shows the opportunity to use interface design artefacts to support the prevention of information overload and tunnel vision.
... Stellvertretend für integrativ-generalisierte Dual-Process Modelle soll das bekannte Intuitiv-Reflektiv Modell von Kahneman (Kahneman, 2003) kurz dargestellt werden. Dieses baut auf anderen integrativ-generalisierten Modellen auf (Epstein, 1994;Smith & DeCoster, 2000), um die Integration von diversen Heuristiken und systematischen Verzerrungen (Bias) in ein theoretisches Konstrukt vorzunehmen (Gilovich, Griffin, & Kahneman, 2002;Kahneman, Slovic, & Tversky, 1974) 23 . Dem Modell werden zwei interagierende Systeme zugrunde gelegt, die anhand verschiedener Eigenschaften charakterisiert werden (Gawronski & Creighton, 2013;Kahneman, 2003). ...
... Entsprechend dem default-interventionistischen Dual-Process Ansatz (Evans & Stanovich, 2013) erzeugt System 1 stimulusgebundene Wahrnehmungseindrücke der gegenwärtigen Situation, die durch System 2 überwacht werden und diese bei Bedarf bestärken, anpassen oder blockieren kann. Dieses generalisierte Modell von Kahneman hat einen signifikanten Beitrag dazu geleistet, die Einzeleffekte aus der Heuristik-Forschung (Gilovich et al., 2002;Kahneman et al., 1974) in ein konzeptuelles Modell zu integrieren, wodurch sich die Dominanz der Dual-Process Theorien zur Erklärung von Entscheidungsprozessen manifestieren konnte (Evans & Stanovich, 2013;Gawronski & Creighton, 2013). ...
Chapter
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Zusammenfassung Im folgenden Kapitel 2 werden die theoretischen und begrifflichen Grundlagen der Consumer Decision Neuroscience dargestellt. Dabei werden in Abschnitt 2.1 zunächst ökonomische, behavioristische und kognitive Ansätze beschrieben, wobei das Kapitel mit ersten Dual-Process Theorien und dazugehörigen Kritikpunkten endet, die eine theoretische Weiterentwicklung der Modelle durch die Integration von neurowissenschaftlichen Erkenntnissen zur Erklärung von Konsumentenentscheidungsprozessen avisieren. Die Forschungsgebiete, die sich aus dieser neurowissenschaftlichen Integration ergeben, werden in Abschnitt 2.2 definiert, systematisiert und differenziert, um anschließend das daraus entstandene Forschungsgebiet der Consumer Decision Neuroscience von bestehenden Forschungsgebieten abzugrenzen. Aufbauend auf den beiden vorangegangenen Kapiteln, wird in Abschnitt 2.3 anschließend das Reflektiv-Impulsiv Modell als eine neurowissenschaftlich fundierte Dual-Process Theorie vorgestellt, die als konzeptioneller Rahmen der vorliegenden Arbeit dient.
... For that purpose, it is prepared to make a larger total number of mistakes. This phenomenon is known as 'error management' (Haselton & Buss, 2000;Tversky & Kahneman, 1974). A good example of error management is the tendency of men to overestimate the interest women have in them. ...
... As I pointed out in chapter 3, truth may not be an end in itself for natural 5 mastering critical thinking selection, but it is usually the best way to ensure the survival and reproduction of an organism, at least when it comes to navigating the natural environment. Recently, there has been a reaction against Kahneman and his colleague Tversky (Tversky & Kahneman, 1974) as well as against other cognitive psychologists who were mainly focused on showing that our intuitive heuristics (the automatic thinking rules of system 1) lead to irrationality. According to the German psychologist Gigerenzer (2000), these heuristics are not 'misleading because they are simple', but rather well-adjusted tools evolved to deal successfully with important 'ecologically relevant' problems. ...
Book
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“Critical thinking is one of the biggest hiatuses in our education system. Learning to distinguish sense from nonsense is of great importance in the information age that we live in. In a systematic way, this book helps you to gain insight into, and subsequently eliminate, the most important reasoning errors that we all tend to make. It also helps you to debunk weak and fallacious arguments and unreliable information. In addition to understanding what critical and scientific thinking entails, you will learn more about what makes science reliable. In times of skepticism regarding science, where (sometimes dangerous) pseudoscientific and conspiracy theories run rampant, this is particularly important. Critical thinking is not a matter of intellectual preference or even self-interest (although one certainly benefits from thinking critically). It is first and foremost a matter of moral and social responsibility. Better thinking leads to a better world. With this book I hope to contribute to that important goal and you, dear student or reader, can do the same!” - Michael Vlerick
... Daarvoor is het bereid een groter aantal fouten te maken. Dat fenomeen staat in de literatuur bekend als 'error management' (Haselton & Buss, 2000;Tversky & Kahneman, 1974). Een goed voorbeeld hiervan is de neiging van mannen om de interesse die vrouwen voor hen tonen te overschatten. ...
... Zoals ook benadrukt in hoofdstuk 3, is waarheid misschien geen doel op zich voor natuurlijke selectie, maar het is doorgaans wel het beste middel om te overleven en reproduceren (toch tenminste wat betreft het navigeren van onze natuurlijke omgeving). Op het onderzoek van Kahneman en zijn collega Tversky (Tversky & Kahneman, 1974) en nog een reeks andere cognitieve psychologen die er vooral op gericht waren aan te tonen dat de heuristieken (de automatische denkregels) die we intuïtief toepassen tot irrationaliteit leiden, is er een reactie gekomen. ...
Book
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Kritisch denken is een van de grootste lacunes in ons onderwijs. Zin van onzin leren scheiden is van enorm belang in het informatietijdperk waarin we leven. Dit boek helpt je op systematische wijze inzicht te krijgen in en komaf te maken met de belangrijkste denkfouten die elke mens spontaan maakt. Het helpt je ook drogredenen en onbetrouwbare informatie te ontmaskeren. Naast inzicht in wat kritisch en wetenschappelijk denken inhoudt, kom je ook meer te weten over wat wetenschap betrouwbaar maakt. In tijden van wetenschapsscepticisme, waar (soms gevaarlijke) pseudowetenschappelijke en complottheorieën welig tieren, is dat bijzonder belangrijk. Kritisch denken is geen kwestie van intellectuele voorkeur, of zelfs van eigenbelang (alhoewel je er zeker voordeel uithaalt). Het is in de eerste plaats een kwestie van morele en maatschappelijke verantwoordelijkheid. Uit beter denken volgt een betere wereld. Met dit boek hoop ik daar een steentje aan bij te dragen en kan jij, beste student of lezer, dat ook doen! Michael Vlerick
... The early work in this area indicated that individuals use short cuts (heuristics) in processing information which, in some cases, may lead to biases in decision-making (Gilovich, Griffin, & Kahneman, 2002). Subsequent published works build on cognitive biases on the role of affect, emotion and stigma on risk perception (Tversky & Kahneman, 1974). This approach, which became the psychometric paradigm developed by Slovic, Fischhoff, and Lichtenstein (1984), led to a 'cognitive map' of hazards. ...
... 'Unknown risks' are unobservable, novel, uncertain and often have delayed effects. Perceptional factors influence risk perception (Kahneman & Tversky, 1979;Slovic, 2000;Slovic, Finucane, Peters, & MacGregor, 2004a;Tversky & Kahneman, 1974), based on the crosslinks between the triple strand of conscious, subconscious and affective factors (Hillson & Murray-Webster, 2007). ...
Thesis
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This thesis contributes to knowledge about consumer decision-making and risk perception related to the use of biotechnology in food production. Paper I presents a meta-analysis that examined the systematic evidence from existing research on consumers’ evaluation of biotechnology in food products. The results indicated that genetically modified (GM) food with agronomic benefits is considered an inferior alternative to unmodified food products, but its direct consumer benefits were considered more desirable. Furthermore, consumer evaluation of biotechnology was largely insensitive to the type of food product. However, the type of gene modification was important for consumers’ evaluation. Using artefactual field experiments, Papers II-IV explore the effect of context on Swedish consumer behaviour in relation to a GM food with direct tangible benefits. Papers II and III examine the interdependency in consumer decision-making, with the focus of Paper III shifting towards satisfaction as the outcome of the decision-making process. Paper II shows that the policy regulations in place had a decisive influence on consumer acceptance and that the policy context itself may induce opposition to GM food. The greatest consumer opposition was found in the most restrictive policy scenarios. The aim of Paper III was to extend the Kano model of satisfaction and use it to assess consumer satisfaction in relation to decisions taken by upstream actors in the food value chain (FVC) with respect to GM food. The findings suggest that both consumer choices and satisfaction were dependent on the degree of unanimous stances adopted by upstream food value chain actors in supporting the GM food product. Actors’ consistent rejection of GM food resulted in lower consumer acceptance of GM food and greater overall satisfaction. In contrast, consumers were more receptive to and satisfied with GM foods when the FVC actors consistently took supportive stances. This suggests that being pro-GM food is probably not a stable trait. In addition, the analysis lent support to a general preference for and higher satisfaction under a mandatory labelling regime. Paper IV explores the role of food policy regulations in cognitive information processing and deliberation of consumers’ own risk responsibility related to GM food, and whether the effect is dependent on the type of risk. The findings suggest that consumers who have health concerns show less willingness to assign responsibility to themselves in situations where GM products are introduced.
... For the survey content, questions were reviewed to ensure neutral wording to avoid anchoring bias. 19 Numeric questions were provided with a slider tool to reduce imprecision bias. 19 Likert scale answers were used for questions pertaining to agreement with a statement. ...
... 19 Numeric questions were provided with a slider tool to reduce imprecision bias. 19 Likert scale answers were used for questions pertaining to agreement with a statement. 20 We incorporated branching logic for neurointerventional-related questions only to be presented to neurointerventionalists. ...
Article
Background The best management of basilar artery occlusion (BAO) remains uncertain. The BASICS (Basilar Artery International Cooperation Study) and the BEST (Basilar Artery Occlusion Endovascular Intervention Versus Standard Medical Treatment) trials reported neutral results. We sought to understand physicians’ approaches to BAOs and whether further BAO randomized controlled trials were warranted. Methods We conducted an online international survey from January to March 2022 to stroke neurologists and neurointerventionalists. Survey questions were designed to examine clinical and imaging parameters under which clinicians would offer (or rescind) a patient with BAO to endovascular therapy (EVT) or best medical management versus enrollment into a randomized clinical trial. Results Of >3002 invited participants, 1245 responded (41.4% response rate) from 73 countries, including 54.7% stroke neurologists and 43.6% neurointerventionalists. More than 95% of respondents would offer EVT to patients with BAO, albeit in various clinical circumstances. There were 70.0% of respondents who indicated that the BASICS and BEST trials did not change their practice. Only 22.1% of respondents would perform EVT according to anterior circulation occlusion criteria. The selection of patients for BAO EVT by clinical severity, timing, and imaging modality differed according to geography, specialty, and country income level. Over 80% of respondents agreed that further randomized clinical trials for BAO were warranted. Moreover, 45.6% of respondents indicated they would find it acceptable to enroll all trial‐eligible patients into the medical arm of a BAO trial, whereas 26.3% would not enroll. Conclusion Most stroke physicians continue to believe in the efficacy of EVT in selected patients with BAO in spite of BEST and BASICS. There is no consensus on which selection criteria to use, and few clinicians would use anterior circulation occlusion criteria for BAOs. Further randomized clinical trials for BAO are warranted.
... Again, comparing (35) with (74) and (75), and using the result of Theorem 3.2, it is straightforward to see that after declaration ofr k at period k, and when solving manufacturer's optimization problem for the time interval {k + 1, · · · , n} the backward induction process will yield the same {w * k+1 , · · · , w * n } as those obtained 16 This preprint research paper has not been peer reviewed. Electronic copy available at: https://ssrn.com/abstract=4204363 ...
... where k denotes the current period. However, not every market behaves in such a simple manner, as strategic buyers base their purchase on the (possibly repetitive) trends of previous prices to which they have become anchored(Tversky & Kahneman 1974). In general, potential buyer's valuation of a commodity and, in turn, their purchase decision may become biased by their comparison of the current price and those of the past. ...
... Behavioral finance emerged when Slovic (1969 and1972) discovered the psychological aspects of investment decisions, and subsequently financial behavior began to be discussed by academics. Kahneman and Tversky (1974) stated that an uncertain situation (uncertainty) would lead to heuristics or biases, then Kahneman and Tversky (1979) proposed a prospect theory, then Thaler in 1985 presented the theory of Mental Accounting, while Statman (1985, 2000) succeeded in developing the science of Financial Behavior in various studies. Bondt (1998) found the representation of individual investors. ...
... Financial Behavior research was initially based on the Theory of Games and Economic Behavior written by Von Neumann and Morgenstern in 1944 and continued by Slovic in 1969 and 197 who discovered psychological aspects and then Tversky and Kahneman in 1974 and1979 found heuristic theory and prospects which later became the foundation of the subsequent development of Financial Behavior, and in the end there were studies on Financial Behavior related to the Islamic/Muslim world (Islamic Financial Behavior) which mostly focused on the Theory of Planned Behavior as well as various variables such as Islamic law, subjective norms , attitude, religiosity, etc. The results of this literature review the author concludes that there are two different directions between Financial Behavior and Islamic Financial Behavior in terms of the theoretical foundation and also the variables studied in the research, it is highly expected for the development of Islamic Financial Behavior theory and future studies on Islamic Financial Behavior must adopt Islamic theories that apply to financial and investment behavior that is consistent with Sharia principles. ...
Article
p>The purpose of this research to analyze the existing literature on Behavior Finance and Islamic Behavior Finance which can contribute to future studies in the field of Islamic Behavior Finance. This research is based on a critical review of Islamic Behavior Finance. Research findings that there are two different directions between Behavior Finance and Islamic Behavior Finance, further research is needed to develop and find new theories to advance knowledge in the field of Islamic Behavior Finance that can provide information for a Muslim to invest in accordance with sharia principles and provide a broader insight into investment in terms of psychology or behavior. Keywords: Investment, behavior Finance, Islamic Behavior Finance, Sharia and Psychology </p
... H&B focuses on two so-called general purpose heuristics (Kahneman and Frederick, 2002): availability (Tversky and Kahneman 1973;Schwarz and Vaughn 2002) and representativeness (Kahneman and Frederick 2002;Stolwijk 2020;Stolwijk and Vis 2021;Tversky and Kahneman 1974) which subsume many other heuristics. 2 In general, people use the availability heuristic when assessing how likely it is that something occurs by focusing on the ease with which they can think of instances or occurrences of it. They use the representativeness heuristic when answering difficult questions of probability by replacing them with simpler questions of resemblance (Kahneman and Tversky 1972: 431). ...
... The availability and representativeness heuristics often facilitate judgment and decision-making but can also lead to decisionmaking biases. The predictable biases related to the availability heuristic result from the retrievability of examples, with "available events" coming more readily to mind (Tversky and Kahneman 1974). ...
Article
Theories of policy responsiveness assume that political decision-makers can rationally interpret information about voters’ likely reactions, but can we be sure of this? Political decision-makers face considerable time and information constraints, which are the optimal conditions for displaying decision-making biases—deviations from comprehensive rationality. Recent research has shown that when evaluating policies, political decision-makers display biases related to heuristics—cognitive rules of thumb that facilitate judgments and decision-making—when evaluating policies. It is thus likely that they also rely on heuristics in other situations, such as when forming judgments of voters’ likely reactions. But what types of heuristics do political decision-makers use in such judgments, and do these heuristics contribute to misjudgements of voters’ reactions? Existing research does not answer these crucial questions. To address this lacuna, we first present illustrative evidence of how biases related to heuristics contributed to misjudgements about voters’ reactions in two policy decisions by UK governments. Then, we use this evidence to develop a research agenda that aims to further our understanding of when political decision-makers rely on heuristics and the effects thereof. Such an agenda will contribute to the literature on policy responsiveness.
... Stellvertretend für integrativ-generalisierte Dual-Process Modelle soll das bekannte Intuitiv-Reflektiv Modell von Kahneman (Kahneman, 2003) kurz dargestellt werden. Dieses baut auf anderen integrativ-generalisierten Modellen auf (Epstein, 1994;Smith & DeCoster, 2000), um die Integration von diversen Heuristiken und systematischen Verzerrungen (Bias) in ein theoretisches Konstrukt vorzunehmen (Gilovich, Griffin, & Kahneman, 2002;Kahneman, Slovic, & Tversky, 1974) 23 . Dem Modell werden zwei interagierende Systeme zugrunde gelegt, die anhand verschiedener Eigenschaften charakterisiert werden (Gawronski & Creighton, 2013;Kahneman, 2003). ...
... Entsprechend dem default-interventionistischen Dual-Process Ansatz (Evans & Stanovich, 2013) erzeugt System 1 stimulusgebundene Wahrnehmungseindrücke der gegenwärtigen Situation, die durch System 2 überwacht werden und diese bei Bedarf bestärken, anpassen oder blockieren kann. Dieses generalisierte Modell von Kahneman hat einen signifikanten Beitrag dazu geleistet, die Einzeleffekte aus der Heuristik-Forschung (Gilovich et al., 2002;Kahneman et al., 1974) in ein konzeptuelles Modell zu integrieren, wodurch sich die Dominanz der Dual-Process Theorien zur Erklärung von Entscheidungsprozessen manifestieren konnte (Evans & Stanovich, 2013;Gawronski & Creighton, 2013). ...
Chapter
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Zusammenfassung In ausgewählten Beiträgen werden Käufer- und Konsumentenentscheidungsprozesse anhand verschiedener methodischer, neurowissenschaftlich fundierter Herangehensweisen empirisch untersucht, um die Entscheidungsprozesse umfassend beschreiben, effektiver unterstützen und erfolgreich vorhersagen zu können.
... We exploit the following facts: (a) unlike a structural state that is inherently a continuous quantity, the maintenance strategies are countable; (b) the consequence cost function associated with each maintenance action label is implicitly designed by considering a level of damage; thus, choosing an optimal maintenance strategy allows us to reasonably use the associated labels as a proxy to discrete state classifiers. Although the consequence cost function for a set of maintenance actions may be estimated reasonably by the structural asset owner/operator, the actual decisions made are inherently affected by the biases and heuristics of the decision-maker (e.g., an inspection engineer) or are risk-weighted [36]. Not only is the behavioral risk profile of an individual decision-maker affected by his/her biases, but also by any organizational values and priorities. ...
Article
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This paper proposes an approach to select a maintenance strategy from a predefined set of choices considering the decision maker’s behavioral risk profile. It is assumed that the damage state is characterized by a continuous state parameter probabilistically inferred from observable sensor data. This work applies an engineering application of consequence-based decision-making incorporating the acceptable risk intensity of the decision-maker, i.e., the decision-maker’s (individual or an organization) valuation of the outcome of a decision, using a risk profile model. The utility of a decision-maker is subjective, and this paper considers the fact that different decision-makers mentally assign a different importance factor (the utility) to the seriousness or urgency to take necessary actions with the increasing intensity of structural damage. The approach herein incorporates a layer of human psychology on selecting appropriate maintenance strategies that not only depend on the posterior distribution of unmeasurable damage state but also consider the behavioral risk profile of the decision-maker. The collective decision-making of an organization consisting of many individuals is also investigated. The approach is exemplified in a case study involving life cycle monitoring of a miter gate, part of a lock system enabling navigation of inland waterways.
... A major breakthrough in cancer research tempts an enthusiastic public attention on stock prices (Huberman and Regev, 2001). Behavioural asset pricing models are developed on the key underlying assumptions that investors are not always fully rational and there are limits to arbitrage and investment decisions are driven by psychological biases that may lead to errors (Barberis and Thaler, 2003;Tversky and Kahneman, 1974;Hirshleifer, 2001). The behavioural model proposed by Barberis et al. (1998) explains how investors overreact to certain events and underreact to others based on their judgment biases. ...
Article
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This paper examines the impact of the COVID-19 pandemic, and the resulting investor-sentiment in determining portfolio returns of healthcare, telecommunication, insurance, banking and hotel sector companies in the Colombo Stock Exchange, Sri Lanka. A first-stage event study methodology and a second-stage regression-based methodology are adopted to evaluate the impact of pandemic-related-news to identify the influence of investor-sentiment on sector portfolio returns and its persisting effects. The most striking phenomenon is positive and persisting Cumulative Average Abnormal Returns perceived after a long Island-wide lockdown curfew is lifted on 11-May-2020. Results of a second-stage regression-based analysis indicate an initial negative sentiment, followed by a positive sentiment thereafter. The initial negative effect is relatively robust on banks and hotel sector stocks. A positive sentiment emanates from over-reaction to the subsequent rebound. CSE-investors are more sensitive to local events than to global news, and are likely to react based on psychological biases, signifying irrational investor behaviour.
... Figure 1 outlines the interaction that takes place among the agent doctor A, the human doctor B, and the patient C during the diagnostic process. It is well-known that humans use behavioural heuristics in their decision-making processes [30]. In order to capture these heuristics, we make use of an abstraction procedure embedded in a ToM agent. ...
Chapter
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Theory of mind refers to the human ability to reason about mental content of other people such as beliefs, desires, and goals. In everyday life, people rely on their theory of mind to understand, explain, and predict the behaviour of others. Having a theory of mind is especially useful when people collaborate, since individuals can then reason on what the other individual knows as well as what reasoning they might do. Realization of hybrid intelligence, where an agent collaborates with a human, will require the agent to be able to do similar reasoning through computational theory of mind. Accordingly, this paper provides a mechanism for computational theory of mind based on abstractions of single beliefs into higher-level concepts. These concepts can correspond to social norms, roles, as well as values. Their use in decision making serves as a heuristic to choose among interactions, thus facilitating collaboration on decisions. Using examples from the medical domain, we demonstrate how having such a theory of mind enables an agent to interact with humans efficiently and can increase the quality of the decisions humans make.
... People show biases and follow more straightforward paths to shape their beliefs about uncertain events. For example, people assign different weights to gains and losses (Kahneman and Tversky, 1979) or ponder risks according to how vividly they portray the outcomes of an adverse event, regardless of the probabilities (Tversky and Kahneman, 1974). Even past experiences matter, since people rate higher those risk sources they have been exposed to previously (Öhman, 2017). ...
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Agricultural production is a challenging business in Argentina due to output variability, unfavorable government policies, and the absence of public risk management programs. Based on probit modeling and information surveyed from producers farming in the Humid Pampa, this paper studies the influence of (a) risk attitudes, (b) risk perceptions, and (c) socioeconomic factors on the probability of choosing five different risk management strategies. Besides confirming that some results previously found in the literature apply to the Argentine case, we find that local farmers have a particular understanding of specific risk management strategies. Some strategies usually applied to reduce risks, such as the use of futures markets or vertical integration are perceived by Argentine farmers as risk-increasing. Cost control is the preferred strategy for risk-averse farmers. Policymakers and companies providing services should take into consideration the particular way in which Argentine farmers perceive and manage risks to build a common language.
... [61]). Heuristics and mental shortcuts, often referred to as cognitive errors or limitations in human intelligence, do serve an evolutionary purpose [71]. They help to make quick decisions in difficult or uncertain situations while using limited information and cognitive resources [72]. ...
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One of the biggest challenges in Artificial Intelligence (AI) development and application is the lack of consideration for human enhancement as a cornerstone for its operationalization. Nor is there a universally accepted approach that guides best practices in this field. However, the behavioral science field offers suggestions on how to develop a sustainable and enriching relationship between humans and intelligent machines. This paper provides a three-level (micro, meso and macro) framework on how to humanize AI with the intention of enhancing human properties and experiences. It argues that humanizing AI will help make intelligent machines not just more efficient but will also make their application more ethical and human-centric. Suggestions to policymakers, organizations, and developers are made on how to implement this framework to fix existing issues in AI and create a more symbiotic relationship between humans and machines moving into the future.
... Tous les participants ont commencé par une tâche d'évaluation. Dans cette tâche, ils devaient évaluer tous les stimuli qui leur étaient présentés (voir Figure 25) (Kahneman, 2012;Tversky and Kahneman, 1974). Ensuite, nous avons moyenné les betas issus du modèle pour chaque bloc à travers les participants et nous avons testé leur significativité à l'aide d'un t.test en les comparant à zéro. ...
Thesis
Tous les jours, nous prenons des décisions sur les actions que nous souhaitons entreprendre. Ces décisions se fondent sur un compromis entre les bénéfices que nous espérons obtenir après avoir effectué ces actions, et les coûts, en termes d’effort, associés à ces actions. Cette thèse s’intéresse aux bases cérébrales du compromis coûts/bénéfices au travers de trois études menées chez des participants sains à l’aide de l’imagerie par résonance magnétique fonctionnelle. Dans la première étude, nous avons pu dissocier les bases cérébrales du calcul du compromis coûts/bénéfices des bases cérébrales des variables régulant ce calcul. En effet, dans cette étude, le calcul du compromis coûts/bénéfices était associé au cortex préfrontal ventromédian alors que la confiance dans la décision et le temps passé à délibérer étaient associés à des parties plus dorsales du cortex préfrontal médian. La seconde étude a permis de montrer que, dans deux tâches, impliquant un effort mental ou physique, la performance s’expliquait mieux par un biais pavlovien, donnant plus de poids aux gains qu’aux pertes, que par une aversion à la perte, telle qu’elle a été caractérisée principalement dans des tâches de choix. La troisième étude nous a permis de montrer que, même dans une tâche simple d’apprentissage par renforcement, les aires cérébrales liées à l’exécution d’un effort mental étaient recrutées au moment du calcul du compromis coûts/bénéfices, suggérant que cette tâche n’était pas effectuée de manière purement automatique. L’ensemble de nos résultats permet de mieux caractériser les aires cérébrales impliquées dans le compromis coûts/bénéfices et les conditions dans lesquelles ces aires sont actives.
... Measurement bias, also known as information bias, refers to any systematic and/or nonrandom error occurring in a measurement process or classification that may be high or low (Chang et al., 2010;Kesmodel, 2018). Interpretation bias may involve, overly weighting recent information, exaggeration of the likelihood of vivid events, and failure to predict black swan; events that we have never seen (Bratvold, Bickel, & Lohne, 2009;Tversky & Kahneman 1974). Preselection is failure of the randomized sampling procedure, for example, shaley sections of cores cannot be practically subjected to ordinary core analysis (Elwert & Winship 2014;Ma & Gomez 2019). ...
Chapter
The growth of natural gas production in the United States has been boosted by shale-gas production in the Appalachian Basin in the Northeast, the Permian Basin in western Texas and New Mexico, and the Haynesville Shale in Texas and Louisiana. Shale gas is an unconventional gas resource. It differs from the conventional gas resource, which produces natural gas from granular, porous, and permeable formations. The term “shale gas” refers to thermogenic or biogenic gas produced from organic-rich, fine-grained, low-permeability sedimentary rocks (e.g., shale, mudstone, mudrock, and associated lithofacies) upon extensive fracturing. The unconventional shale gas resource is a self-contained system where the rock functions as the hydrocarbon source, migration pathway, reservoir, and seal. Additionally, the shale gas resource requires enhanced drilling/production technologies (e.g., hydraulic fracturing) in order to be produced at economic rates. The gas occurs as free and adsorbed states in the pore spaces. Much gas is adsorbed on the surface of minerals (especially clay minerals) and OM. Therefore the approach to the study of the geological characteristics of a shale gas play is distinctive. To accurately predict the shale gas resource potential, there must be a thorough assessment of the paleodepositional environment, organic geochemistry, thermal maturity, reservoir thickness, mineralogy, mechanical property, porosity, and permeability.
... Tak rygorystyczna i trudna do spełnienia definicja wywołała wiele odpowiedzi ze strony badaczy. Na podstawie licznych paradoksów racjonalności (Allais, 1953;Ellsberg, 1961;Falkowski, Tyszka, 2009) oraz dowodów na heurystyczne myślenie u ludzi (Tversky, Kahneman, 1974), podjęto próby utworzenia bardziej praktycznych i życiowych definicji racjonalności w ekonomii. Ideę racjonalności nieograniczonej Herbert Simon zastąpił ograniczoną racjonalnością (1957), która zamiast reguły maksymalizacji użyteczności przyjęła zasadę satysfakcji (wybrany zostaje pierwszy wariant spełniający oczekiwania), jak również zrezygnowała z aksjomatów teorii użyteczności na rzecz heurystyk. ...
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Cel. Celem niniejszego badania było sprawdzenie, czy sposób interpretowania racjonalności przez osoby badane łączy się z ich decyzjami ekonomicznymi i skłonnościami do maksymalizowania. Materiały i metody. Przeprowadzono badanie na 204 osobach w wieku głównie studenckim,z wykorzystaniem utworzonych definicji racjonalności, dwóch wariantów gry dyktator oraz Skali maksymalizacji, za pomocą platformy Qualtrics. Wyniki. Najważniejsze wyniki sugerują, że sposób rozumienia racjonalności powiązany jest z wysokością ofert składanych w grach dyktator - związek jest dodatni dla filozoficznej definicji, zaś negatywny dla ekonomicznej. Jednocześnie wyniki na Skali maksymalizacji wykazały (częściowo) istotne związki z ofertami składanymi w grze dyktator. Osoba badana, która preferowała ekonomiczną definicję racjonalności, była mężczyzną, osiągała wysoki poziom na Skali maksymalizacji oraz studiowała kierunek ekonomiczny, miała największą skłonność do składania niższych ofert w grze dyktator. Wnioski. Badanie pokazuje, że sposób definiowania i rozumienia racjonalności może być powiązany w istotny sposób z tym, jak dana osoba zarządza pieniędzmi – czy kieruje się preferencjami zorientowanymi prospołecznie, czy też jej wybory są bardziej egoistyczne. Kontynuowanie tychże rozmyślań w teorii oraz praktyce może przyczynić się do rozwoju i uaktualnienia fundamentalnych terminów (i przyjętych wobec nich stanowisk) w psychologii, filozofii i ekonomii. Słowa kluczowe: racjonalność, altruizm, gra dyktator, maksymalizacja
... (Kahneman, 2003). Accordingly, Dual Process Theory drew attention to two distinct thought systems: Intuitive System 1 and deliberate System 2 (Kahneman, 2003;Tversky & Kahneman, 1974). In particular, System 1, which is thought to play a more dominant role in making decisions under uncertain situations, is considered to be automatic, fast, effortless, emotional, implicit, and difficult to control and change. ...
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The main goal of the study was to scrutinize mediating and moderating mechanisms identified in line with the predictions of Somatic Marker Hypothesis (SMH) and Dual Process Theory of the effect of acute stress on decision making. The sample group of the research comprised of 61 (31 females, 30 males) healthy university students aged between 18 and 23 (x̄ = 21, SD = 1.28). Data measurement tools were Skin Conductance Response Measurement, Iowa Gambling Test, Wisconsin Card Sorting Test, Wechsler Memory Scale-III Spatial Span Subtest, Stroop Test TBAG Form, Wechsler Adult Intelligence Matrix Reasoning Subtest, Stress Rating Scale, The State-Trait Anxiety Inventory, Big Five Personality Traits Scale, Ways of Coping Inventory, Beck Depression Inventory. The findings indicated that acute stress gives rise to decision-making failures by suppressing the SCR emphasized in SMH and mental processes defined in System 2. Furthermore, neuroticism had a moderating role in the relationship between stress and decision-making. Accordingly, the abovementioned theories cannot separately be sufficient to explain decision-making under stress; but, the predictions of these theories can complement each other to thoroughly make out the physiological and cognitive mechanisms of decision-making.
... In fact, uncertainty is a key component in studies of decision-making because it denotes a typical condition in organizational reality: unknowingness. More specifically, scholars in cognitive psychology, decision sciences, and -most importantly for us -organization studies have focused on how to deal with uncertainty and its implications (Cyert & March, 1963;March & Simon, 1958;Tversky & Kahneman, 1974;Williamson, 1979). During the 1960s, Burns and Stalker (1961) studied how different organizational forms were able to innovate based on their ability to cope with environmental uncertainty. ...
Chapter
Ambiguity has been at the core of organization theory for a long time. It is a lens through which organizational scholars have looked at many aspects of organizational life, including decision-making, strategy, change, communication and stakeholder management. This Element presents and discusses the main trajectories in the evolution of this concept and the most relevant theoretical contributions developed around ambiguity. In particular, we elaborate on both the intrinsic perspectives on ambiguity as an inherent part of organizational decision- making processes and the more recent strategic perspectives on discursively constructed strategic ambiguity. In doing so, we illuminate the path ahead of organizational scholars and offer new avenues for future research. This is important given the ever more pervasive presence of ambiguity in and around organizations and societies.
... Moreover, the bias can be manipulated through processes such as anchoring and priming, as described in the seminal work of Tversky and Kahneman (1975). Anchoring, the tendency to stick close to an initial estimate, no matter how that estimate was derived, doesn't just affect individuals-it affects entire disciplines. ...
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Many widely used models amount to an elaborate means of making up numbers--but once a number has been produced, it tends to be taken seriously and its source (the model) is rarely examined carefully. Many widely used models have little connection to the real-world phenomena they purport to explain. Common steps in modeling to support policy decisions, such as putting disparate things on the same scale, may conflict with reality. Not all costs and benefits can be put on the same scale, not all uncertainties can be expressed as probabilities, and not all model parameters measure what they purport to measure. These ideas are illustrated with examples from seismology, wind-turbine bird deaths, soccer penalty cards, gender bias in academia, and climate policy.
... Este comportamiento anti-persistente puede tener dos fuentes: generado endógenamente -por ejemplo, ver el efecto sobrerreacción deDornbusch (1976)-o a partir de políticas exógenas. Para el caso de Uruguay, se pueden identificar fácilmente cuatro planes de estabilización(Banda, 1994); en la Figura 4.1 se pueden observar los efectos de la Reforma Monetaria y Cambiaria de 1959, del plan de congelación de precios y salarios del año 1968, del Plan de Estabilización de 1978 y el plan de 1990, basado en un crawling-peg asociado a una banda de flotación del dólar.Respecto al índice que las autoridades deben tomar como objetivo de las políticas, se presenta en el Capítulo 5 importante evidencia a favor de trabajar a partir de la información brindada por el índice general y no mediante índices que miden la inflación subyacente de la economía.Finalmente, pueden realizarse algunas apreciaciones respecto del modelo presentado en el Capítulo 8. El modelo presenta patrones evolutivos y es altamente sensible a cambios en los valores de los parámetros individuales -ver Figura 8.1 -mientras que la estabilidad del modelo y la aparición de leyes de escala no se ven modificadas ante cambios en los parámetros de política monetaria -ver Tabla 8.3-, lo cual requiere futuras extensiones para conocer los mecanismos a través de los cuales interactúan las políticas con las decisiones.Por último, cabe suponer que las metas de inflación y la formalización de un rango aceptable por parte de los Bancos Centrales puede inducir un efecto anclaje(Tversky and Kahneman, 1974) en los agentes económicos. El objetivo de estas metas consiste en "alinear" expectativas; sin embargo, a partir de los resultados del modelo, el no cumplimiento de los objetivos puede tener efectos adversos en la estabilidad del sistema.A.1. ...
Thesis
ABSTRACT In this research, contributions are made to analyze inflationary phenomena from the approach of complex systems in Economics. In particular, the phenomenon to be analyzed is self-organization in price formation systems, its manifestations and its possible effects on economic systems. The thesis consists of a series of empirical analysis referring to the inflationary process in Uruguay, bibliometric reviews on relevant aspects in modeling and the presentation of a model on inflationary processes that takes into account many of the considerations of the previous chapters. To facilitate the external validity of the results of this work, improvements are proposed in the modeling and communication of the economic models, as well as the adaptation of the techniques to the studied phenomena. The results allow observing the price formation system as a self-organized process, with a non-ergodic structure and evolutionary patterns. Regarding modeling, it is observed that the problems in the representation of inflationary phenomena in developing economies are determined by the assumptions applied, the way in which the procedures and results are shown, and the techniques used. Keywords: Economics, inflation, expectations, complex systems, agent-based models, complex networks. RESUMEN En esta tesis se realizan contribuciones para poder analizar los fenómenos inflacionarios a partir del enfoque de los sistemas complejos en Economía. En particular, el fenómeno a analizar es la auto-organización en los sistemas de formación de precios, sus manifestaciones y sus posibles efectos en los sistemas económicos. La tesis consta de una serie de análisis empíricos referidos al proceso inflacionario en Uruguay, revisiones bibliométricas sobre aspectos relevantes en la modelización y la presentación de un modelo sobre procesos inflacionarios que toma en cuenta muchas de las consideraciones de los capítulos anteriores. Para facilitar la validez externa de los resultados de este trabajo, se proponen mejoras en la modelización y en la comunicación de los modelos económicos, así como la adecuación de las técnicas a los fenómenos estudiados. Los resultados permiten observar al sistema de formación de precios como un proceso auto-organizado, con una estructura y patrones evolutivos no-ergódicos. En cuanto a la modelización, se observa que los problemas en la representación de los fenómenos inflacionarios de economías en desarrollo se encuentran determinados por los supuestos aplicados, por la forma en que se muestran los procedimientos y los resultados y por las técnicas empleadas. Palabras clave: Economía, inflación, expectativas, sistemas complejos, modelos basados en agentes, redes complejas.
... Cases in point include the spread of neo-liberal economic programs [8] or "Third Way" social democratic policies [9]. Other parties' policy stances help party strategists navigate difficult programmatic choices because they serve as a heuristic, i.e., a cognitive shortcut to guide rational action in uncertain and complex environments [10]. In an attempt to position a1111111111 a1111111111 a1111111111 a1111111111 a1111111111 the attendant electoral penalties, and connect them to populist policy programs. ...
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We analyze how parties respond programmatically to populist parties in power abroad. Political parties often copy the policies of governing parties in other countries–a phenomenon that contributes to waves of transnational policy diffusion. We report the first large-scale comparative study showing that populist parties in government abroad trigger the opposite reaction: instead of inspiring emulation, their highly visible governing dilemmas provoke a policy backlash by parties in other states. We argue that dilemmas arise because populist parties confront unique and debilitating trade-offs between maintaining their anti-system posture and governing effectively, which make them electorally vulnerable. Other parties observe foreign populists’ governing dilemmas and respond by distancing themselves in order to avoid these problems. We detect this “foreign populist backlash effect” using spatial econometric analysis, a method that allows us to estimate international policy connections between parties, applied to over 200 European parties’ programmatic positions since the 1970s. Our findings illuminate parties’ election strategies and show that this backlash effect constrains the spread of populism across Western democracies.
... How could such essentially orthogonal and conflicting belief systems ever be reconciled, never mind integrated? What scientist-believers like Thomson and Townes really illustrate is that humans are easily capable of holding inconsistent beliefs, a fact which should come as no surprise to anyone familiar with the basics of cognitive psychology (e.g., Festinger, 1957;Tversky & Kahneman, 1974;Neisser, 2014). And the writings that we have examined of apologetic scientist-believers like Collins, McGrath, Hutchinson and Lennox amply demonstrate their inventiveness in actively seek ways to rationalise the inconsistency. ...
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In the preceding Part 1 of this two-part paper, I set out the background necessary for an understanding of the current status of the debate surrounding the relationship between science and religion. In this second part, I will outline Ian Barbour’s influential four-fold typology of the possible relations, compare it with other similar taxonomies, and justify its choice as the basis for further detailed discussion. Arguments are then given for and against each of Barbour’s four models: conflict, independence, integration and dialogue. In contradiction of the recent trend to dismiss the conflict model as overly “simplistic”, I conclude that it is the clear front-runner. Critical examination reveals that theology (the academic face of religion) typically proceeds by first affirming belief in God and then seeking rationalisations that protect this belief against contrary evidence. As this is the very antithesis of scientific endeavour, the two disciplines are in unavoidable and irreconcilable conflict.
... Another question that stems from our findings is whether there are other factors beyond the cost of each sample and perceptual noise that might have influenced adults to request a relatively small number of samples for even the most difficult discrimination problems. Previous work 42,43 has suggested that people are relatively insensitive to sample size, and in particular, trust that small samples will reflect the population they are drawn from more than is warranted. While participants in our task were sensitive to relatively small variations in the ratio of objects when contrasted across populations and knew to ask for more information for harder discriminations, they drew much smaller samples (consistent with a belief in the law of small numbers) than was predicted by the globally optimal model. ...
Article
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Decades of research indicate that some of the epistemic practices that support scientific enquiry emerge as part of intuitive reasoning in early childhood. Here, we ask whether adults and young children can use intuitive statistical reasoning and metacognitive strategies to estimate how much information they might need to solve different discrimination problems, suggesting that they have some of the foundations for ‘intuitive power analyses’. Across five experiments, both adults (N = 290) and children (N = 48, 6–8 years) were able to precisely represent the relative difficulty of discriminating populations and recognized that larger samples were required for populations with greater overlap. Participants were sensitive to the cost of sampling, as well as the perceptual nature of the stimuli. These findings indicate that both young children and adults metacognitively represent their own ability to make discriminations even in the absence of data, and can use this to guide efficient and effective exploration. Adults and children can represent the relative difficulty of discriminating two populations and recognize that larger samples are required for populations with greater overlap. This suggests that they have foundations for ‘intuitive power analyses’.
... One of the elements of Heuristic is the Anchoring where investors come to a final decision by adjusting (may not be sufficient) some preliminary information (Matsumoto et al., 2013). Individual investor's processual evaluation of initial information and adjustments to that can be referred to as "cognitive shortcut" (Kahneman & Tversky, 1974). Evidence also shows that overconfidence is another aspect of Heuristics that influences individual decision making (Pauschunder, 2017). ...
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Despite increasing research on the relationship between behavioral factors and investment performance, little is known about the perspective of emerging markets like Bangladesh. This paper investigates the mediating role of socio-political factors in explaining the relationship between behavioral factors and investment performance in the Dhaka Stock Exchange (DSE). Using structural equation modeling (SEM) on 1,123 completed responses, we find that social and political environment mediates investors’ behavior in translating into investment performance. The finding suggests behavioral factors and the socio-cultural context of Bangladesh can explain market anomalies seen for decades in the largest stock exchange in the country and demands further research in this direction. Additionally, results show herding effect has the strongest effect on investment performance through combined mediation effect of social and political factors. The study results have significant implications for both theoretical and practical analysts by contributing to the evolution of post-neoclassical finance theories from an emerging market viewpoint and suggesting the probable causes behind historical market instability in DSE, respectively.
... In fact, uncertainty is a key component in studies of decision-making because it denotes a typical condition in organizational reality: unknowingness. More specifically, scholars in cognitive psychology, decision sciences, and -most importantly for us -organization studies have focused on how to deal with uncertainty and its implications (Cyert & March, 1963;March & Simon, 1958;Tversky & Kahneman, 1974;Williamson, 1979). During the 1960s, Burns and Stalker (1961) studied how different organizational forms were able to innovate based on their ability to cope with environmental uncertainty. ...
Book
Ambiguity has been at the core of organization theory for a long time. It is a lens through which organizational scholars have looked at many aspects of organizational life, including decision-making, strategy, change, communication and stakeholder management. This Element presents and discusses the main trajectories in the evolution of this concept and the most relevant theoretical contributions developed around ambiguity. In particular, we elaborate on both the intrinsic perspectives on ambiguity as an inherent part of organizational decision-making processes and the more recent strategic perspectives on discursively constructed strategic ambiguity. In doing so, we illuminate the path ahead of organizational scholars and offer new avenues for future research. This is important given the ever more pervasive presence of ambiguity in and around organizations and societies.
... The trade-offs between attainability and utility proposed by Fairstein et al. (2019) are common among cognitive models of decision making (Tversky and Kahneman 1974;Gonzalez-Vallejo 2002) and are cognitively plausible for settings involving a single winner. When applied to multiwinner contexts, the formalization of the trade-offs entails calculating a value for every possible missing ballot (see Formula 4) which becomes increasingly implausible and cognitively demanding as m increases. ...
Article
In many real world situations, collective decisions are made using voting and, in scenarios such as committee or board elections, employing voting rules that return multiple winners. In multi-winner approval voting (AV), an agent submits a ballot consisting of approvals for as many candidates as they wish, and winners are chosen by tallying up the votes and choosing the top-k candidates receiving the most approvals. In many scenarios, an agent may manipulate the ballot they submit in order to achieve a better outcome by voting in a way that does not reflect their true preferences. In complex and uncertain situations, agents may use heuristics instead of incurring the additional effort required to compute the manipulation which most favors them. In this paper, we examine voting behavior in single-winner and multi-winner approval voting scenarios with varying degrees of uncertainty using behavioral data obtained from Mechanical Turk. We find that people generally manipulate their vote to obtain a better outcome, but often do not identify the optimal manipulation. There are a number of predictive models of agent behavior in the social choice and psychology literature that are based on cognitively plausible heuristic strategies. We show that the existing approaches do not adequately model our real-world data. We propose a novel model that takes into account the size of the winning set and human cognitive constraints; and demonstrate that this model is more effective at capturing real-world behaviors in multi-winner approval voting scenarios.
... Limitations of expert knowledge elicitation. Both laypeople and experts are sensitive to subjective biases 83,84 . Moreover, the reliability of expert judgements depends on who participates and how questions are posed 19 . ...
... H&B has become widely accepted as the standard way of integrating psychology and economics (Angner, 2019). The H&B program presents itself as a serious challenge to the neoclassical picture of the rational economic man, and argues that a serious reconsideration of rationality is necessary, since individuals are only boundedly rational (Camerer et al., 2004;Mullainathan & Thaler, 2015;Tversky & Kahneman, 1974). The proponents of ecological rationality do not seek to challenge this claim of bounded rationality. ...
Thesis
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The overarching theme of this thesis is that an alternative to what has in recent decades emerged as the mainstream approach to behavioral economics is both possible and needed: a behavioral economics that does not focus exclusively on the workings of individual minds but takes seriously the fact that people are embedded in a social world. Taking this embeddedness seriously means that we need to consider the deeply entangled and interactive nature of the relationship between individuals and their social and institutional environments. In figuring out what the right thing to do is, people are guided not by their inner impulses, or responding to some external standard of rational action, but primarily by a constant process of discovery and learning – through interacting with each other and with their environment – about how to appropriately interpret and evaluate the situation. To study this process, we need behavioral economics of neither individual cognition nor individual psychological wellbeing. Instead, we need the behavioral economics of social interaction: an approach that centers on the study of intersubjective meaning and builds on an insight from the recent cognitive science that individual minds and their environments are epistemically and ontologically entangled.
... Moreover, the bias can be manipulated through processes such as anchoring and priming, as described in the seminal work of Tversky and Kahneman (1975). Anchoring, the tendency to stick close to an initial estimate, no matter how that estimate was derived, doesn't just affect individuals-it affects entire disciplines. ...
Article
Full-text available
Many widely used models amount to an elaborate means of making up numbers—but once a number has been produced, it tends to be taken seriously and its source (the model) is rarely examined carefully. Many widely used models have little connection to the real-world phenomena they purport to explain. Common steps in modeling to support policy decisions, such as putting disparate things on the same scale, may conflict with reality. Not all costs and benefits can be put on the same scale, not all uncertainties can be expressed as probabilities, and not all model parameters measure what they purport to measure. These ideas are illustrated with examples from seismology, wind-turbine bird deaths, soccer penalty cards, gender bias in academia, and climate policy.
... Bu durumda kararların optimal ve istikrarlı olması güçleşmektedir. Tversky ve Kahneman (1974) belirsizlik altında yargıya varma sürecini değerlendirmiştir. Tversky ve Kahneman insanların yargıda bulunurken bilişsel kısa yollar kullandıklarını ve bunun sonucunda varılan kararların önyargılı olduğunu tespit etmiştir. ...
Book
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Ekonomik özgürlük tanımlanarak ekonomik özgürlüğün tarihsel süreci aktarılmaya çalışılmıştır. Bulanık Kümeleme Analiziyle MENA ülkeleri ile Türkiye’nin ekonomik özgürlüklere göre sınıflanması yapılarak bulgular değerlendirilmeye çalışılmıştır.
... Interestingly, decision-making under time constraints leads to nonrational approaches, and managers adopt intuitive approaches (Simon, 1987;Tversky & Kahneman, 1974) is an interesting finding that makes two things very evident. First, business firms were prepared for a long pandemic, and second, they were willing to share knowledge and learn from external organizations. ...
Article
Knowledge management is a key driver of competitive advantage at all times. This paper explores the different knowledge management measures taken by organizations during the initial stages of the pandemic and the various knowledge resources leveraged for the same. The scope of the study is limited to the initial stages of the pandemic, when things were uncertain and most organizations were going through such a crisis for the first time. The methodology used in this paper combines three‐stage thematic coding and a topic modelling algorithm. The data consist of interviews of human resource leaders and articles published in globally renowned sources. The data was collected during the initial stages of the pandemic and it reflects the thorough process during the initial stages of the pandemic. The findings indicate that firms take various short‐term and long‐term knowledge management measures by leveraging on several internal and external knowledge resources. The findings were analytically clustered and theoretically aggregated to develop an integrated framework for organizational navigation during the initial stages of the pandemic. The paper contributes to the literature by making a novel attempt to study the measures taken in the very early stages of the pandemic and some findings are new to the literature. Also, this paper integrates two different methodologies, which is unique to research. The integrated framework could be used by practitioners for developing a resilient knowledge management system.
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The present study examined the determinants of risk perception and anxiety toward COVID-19, which is a new threat for human beings. As determinants, we focused on the effects of gender, age, and media exposure. The present study was conducted online, which obtained 1555 valid responses. The results showed that women consistently perceived higher risk and had higher anxiety toward COVID-19. As for age groups, risk perception was higher in 60s, but there was no difference in anxiety, while estimations of the probability of infection was highest among 60s. Obtaining information from the television and online news was related with risk perception whilst obtaining information from SNS was related with anxiety. An optimism bias was also observed in the present study. The present study found that the risk perception of COVID-19 differs depending on gender and age. The results suggested that we should consider these differences in risk communication of COVID-19.
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