Faced with the choice between creating a risk of harm and taking a precaution against that risk, should I take the precaution? Does the proper analysis of this trade-off require a maximizing, utilitarian approach? If not, how does one properly analyze the trade-off?These questions are important, for we often are uncertain about the effects of our actions. Accordingly, we often must consider whether our actions create an unreasonable risk of injury — that is, whether our actions are negligent.

Drawing on research in the psychology of judgment and decision making, I argue that individual economists acting as experts in matters of public policy are likely to be victims of significant overconfidence. The case is based on the pervasiveness of the phenomenon, the nature of the task facing economists?as?experts, and the character of the institutional constraints under which they operate. Moreover, I argue that economist overconfidence can have dramatic consequences. Finally, I explore how the negative consequences of overconfidence can be (...) mitigated, and how the phenomenon can be reduced or eliminated. As a case study, I discuss the involvement of Western experts in post?communist Russian economic reforms. (shrink)

The research theorizes how hubris impacts ethical decision making and develops empirical evidence that earnings manipulation is more likely at firms led by CEOs influenced by hubris. The theory posits that hubris impairs moral awareness by causing decision makers to ignore external factors that otherwise drive such awareness. Additionally, these individuals apply a flawed subjective assessment of the decision they face which further impairs moral awareness. The predicted result is that hubris leads managers to invoke an amoral decision process which (...) causes a higher incidence of unethical behavior among these individuals. An empirical study investigates the relationship between CEO hubris and the unethical practice of earnings manipulation. This study finds a significant correlation between CEO hubris and earnings manipulation at the firms they lead, an outcome broadly consistent with the theory developed. (shrink)

False polarization (FP) is an interpersonal bias on judgement, the effect of which is to lead people in contexts of disagreement to overestimate the differences between their respective views. I propose to treat FP as a problem of applied social epistemology—a barrier to reliable belief-formation in certain social domains—and to ask how best one may debias for FP. This inquiry leads more generally into questions about effective debiasing strategies; on this front, considerable empirical evidence suggests that intuitively attractive strategies for (...) debiasing are not very effective, while more effective strategies are neither intuitive nor likely to be easily implemented. The supports for more effective debiasing seem either to be inherently social and cooperative, or at least to presuppose social efforts to create physical or decision-making infrastructure for mitigating bias. The upshot, I argue, is that becoming a less biased epistemic agent is a thoroughly socialized project. (shrink)

Economists tend to view ignorance as ?rational,? neglecting the possibility that ignorance is unintentional. This oversight is reflected in economists? model of ?information search,? which can be fruitfully contrasted with ?information browsing.? Information searches are designed to discover unknown knowns, whose value is calculable ex ante, such that this value justifies the cost of the search. In this model of human information acquisition, there is no primal or ?radical? ignorance that might prevent people from knowing which information to look for, (...) lacking omniscience. Unlike ignorance that is rationally chosen on the basis of an accurate cost/benefit calculation, radical ignorance can explain human error. An account of error as grounded in radical ignorance bypasses the need to appeal to irrationality in order to explain economic (and other) mistakes. (shrink)

Economists tend to view ignorance as “rational,” neglecting the possibility that ignorance is unintentional. This oversight is reflected in economists’ model of “information search,” which can be fruitfully contrasted with “information browsing.” Information searches are designed to discover unknown knowns, whose value is calculable ex ante, such that this value justifies the cost of the search. In this model of human information acquisition, there is no primal or “radical” ignorance that might prevent people from knowing which information to look for, (...) lacking omniscience. Unlike ignorance that is rationally chosen on the basis of an accurate cost/benefit calculation, radical ignorance can explain human error. An account of error as grounded in radical ignorance bypasses the need to appeal to irrationality in order to explain economic (and other) mistakes. (shrink)

Robert N. McCauley's new book Why Religion Is Natural and Science Is Not (2011) presents a new paradigm for investigating the relationship between science and religion by exploring the cognitive foundations of religious belief and scientific knowledge. McCauley's contention is that many of the differences and disagreements regarding religion and science are the product of distinct features of human cognition that process these two domains of knowledge very differently. McCauley's thesis provides valuable insights into this relationship while not necessarily leading (...) to a dismissive view of theology or religious belief. His paradigm allows the research lens to focus on cognitive differences in processing scientific versus religious information and the important role of automatic, unconscious, and intuitive cognitive processes in understanding both the natural and supernatural worlds. (shrink)

Negligence is both an important concept and an ambiguous one. Here I concentrate upon the sense of creating an unjustifiable, low-probability risk of future harm. This essay attempts to dispel theprevalent view that only a maximizing, utilitarian approach can render intelligible certain features of negligence analysis—its focus on the marginal advantages and disadvantages of the actor's taking a specific precaution, its consideration and balancing of the short-term effects of different actions, and its sensitivity to a multiplicity of factors. Perhaps certain (...) absolutist deontological perspectives are inconsistent with these features; but other deontological perspectives can easily accommodate them. Careful examination of the concept of negligence helps resolve an important debate about the nature of tort law, supporting the view that fault, rather than corrective justice, is the better interpretation and justification of Anglo-American tort doctrine. (shrink)

The present study describes the mechanism of need regulation, which accompanies the so-called “biased” decisions. We hypothesized an unconscious urge for psychological need satisfaction as the trigger for cognitive biases. In an experimental study (N = 106), participants had the opportunity to win money in a functionality test. In the test, they could either use the solution they had developed (sunk cost) or an alternative solution that offered a higher probability of winning. The selection of the sunk-cost option was the (...) most chosen option, supporting the hypothesis of this study. The reason behind the majority of participants choosing the sunk-cost option seemed to be the satisfaction of psychological needs, despite a reduced chance of winning money. An intervention, which aimed at triggering self-reflection, had no impact on the decision. The findings of this study contribute to the discussion on the reasons for cognitive biases and their formation in the human mind. Moreover, it discusses the application of the label “irrational” for biased decisions and proposes reasons for instrumental rationality, which exist at an unconscious, need-regulative level. (shrink)