A decision under ‘complete uncertainty’ is one where the decision maker knows the set of possible outcomes for each decision, but cannot assign probabilities to those outcomes. This way, the problem of ranking decisions is reduced to a problem of ranking sets of outcomes. All rankings that have emerged in the literature in this domain imply transitivity. In the current study, transitivity is subjected to an empirical evaluation in two experiments, where subjects are asked to choose between sets of monetary (...) consequences. After analysis with a Bayes Factor, very few violations of transitivity were found. It can be concluded that transitivity seems a plausible condition for the ranking of sets of monetary consequences. (shrink)

The relevance to decision research of recent advances in the philosophy of social science is considered. The critical realism of Roy Bhaskar argues for the identification of contextually contingent explanatory mechanisms at multiple levels based on concepts grounded in intersubjectively shared reality. Using examples from the author’s and other’s research on the psychology of decisions involving risk and uncertainty, this paper explores the implications of taking a critical realist approach. It is argued that critical realism has the potential to advance (...) and unify disparate experimental and naturalistic lines of research. Furthermore, a diverse range of experimental, process-tracing and observational methods can play important complementary roles in developing fruitful critical realist explanations of decisions involving risk and uncertainty. (shrink)

People often face preferential decisions under risk. To further our understanding of the cognitive processes underlying these preferential choices, two prominent cognitive models, decision field theory (DFT; Busemeyer & Townsend, 1993) and the proportional difference model (PD; González‐Vallejo, 2002), were rigorously tested against each other. In two consecutive experiments, the participants repeatedly had to choose between monetary gambles. The first experiment provided the reference to estimate the models’ free parameters. From these estimations, new gamble pairs were generated for the second (...) experiment such that the two models made maximally divergent predictions. In the first experiment, both models explained the data equally well. However, in the second generalization experiment, the participants’ choices were much closer to the predictions of DFT. The results indicate that the stochastic process assumed by DFT, in which evidence in favor of or against each option accumulates over time, described people’s choice behavior better than the trade‐offs between proportional differences assumed by PD. (shrink)

In this paper, we investigate some implications of recent results about salience on loan decisions. Using the framework of focus-weighted utility we show that consumers might take out loans even when that yield them negative utility due to the focusing bias. We suggest, however, that this can be counterbalanced and consumers might be more prudent in their decisions and less likely to take out such loans when the usual fixed-installments plan is coupled with an equivalent decreasing-installments option. Moreover, we show (...) that this is true even for loans with prepayment options or when borrowers take default into consideration. We argue that harmful loan consumption could be decreased if a policy would prescribe presentation of loan repayment schedules in a way that employs this effect. (shrink)