Utility maximization is a key element of a number of theoretical approaches to explaining human behavior. Among these approaches are rational analysis, ideal observer theory, and signal detection theory. While some examples of these approaches define the utility maximization problem with little reference to the bounds imposed by the organism, others start with, and emphasize approaches in which bounds imposed by the information processing architecture are considered as an explicit part of the utility maximization problem. These latter approaches are the (...) topic of this issue of the journal. (shrink)

Although widely investigated and used in psychology, the concept of randomness is beset with philosophical and practical difficulties. In this paper, I propose a resolution to a long-standing problem in psychological research by arguing that the inability to comprehend and produce random behavior is not caused by a defect on the part of the observer but is a consequence of conceptual confusion. Randomness describes a state of high complexity which defies analysis and understanding. The well-known biases in predictive behavior are (...) not caused by the observers’ inability to comprehend randomness but reflect a natural pattern-seeking response to high-complexity situations. Further, I address the circularity at the heart of the randomness debate. Replacing randomness with complexity in psychology and cognitive science would eliminate many of the current problems associated with defining, investigating and using this elusive term. (shrink)

A modal analysis of luck, due to Duncan Pritchard, has become quite popular in recent years. There are many reasons to like Pritchard’s analysis, but at least two compelling problems have been identified. So I propose an alternative analysis of luck based on the laws of statistical mechanics. The statistical analysis avoids the two problems facing Pritchard’s analysis, and it has many other attractive features.

Normative theories can be useful in developing descriptive theories, as when normative subjective expected utility theory is used to develop descriptive rational choice theory and behavioral game theory. “Ought” questions are also the essence of theories of moral reasoning, a domain of higher mental processing that could not survive without normative considerations.

We argue that approaches adhering to normative systems can be as fruitful as those by descriptive systems. In measuring people's perception of randomness, discrepancies between human behavior and normative models could have resulted from unknown properties of the models, and it does not necessarily lead to the conclusion that people are irrational or that the normative system has to be abandoned.

This article explores the connection between objective chance and the randomness of a sequence of outcomes. Discussion is focussed around the claim that something happens by chance iff it is random. This claim is subject to many objections. Attempts to save it by providing alternative theories of chance and randomness, involving indeterminism, unpredictability, and reductionism about chance, are canvassed. The article is largely expository, with particular attention being paid to the details of algorithmic randomness, a topic relatively unfamiliar to philosophers.

The present study tests a gestalt explanation for the gambler's fallacy which posits that runs in random events will be expected to reverse only when the run is open or ongoing. This is contrasted with the law of small numbers explanation suggesting that people expect random outcomes to balance out generally. Sixty-one university students placed hypothetical guesses and bets on a series of coin tosses. Either heads or tails were dominant . In a closed run condition the run ended prior (...) to the critical trial , and in an open run condition the run remained open . As hypothesised, participants showed the gambler's fallacy in the open run condition, but not in the closed run condition. This difference is not due to differential memory for the outcomes. Men, and people with more previous experience gambling, were also found to be more prone to the gambler's fallacy. It is argued that the gestalt explanation best explains the results. (shrink)

Beliefs like the Gambler's Fallacy and the Hot Hand have interested cognitive scientists, economists, and philosophers for centuries. We propose that these judgment patterns arise from the observer's mental models of the sequence-generating mechanism, moderated by the strength of belief in an a priori base rate. In six behavioral experiments, participants observed one of three mechanisms generating sequences of eight binary events: a random mechanical device, an intentional goal-directed actor, and a financial market. We systematically manipulated participants’ beliefs about the (...) base rate probabilities at which different outcomes were generated by each mechanism. Participants judged 18 sequences of outcomes produced by a mechanism with either an unknown base rate, a specified distribution of three equiprobable base rates, or a precise, fixed base rate. Six target sequences ended in streaks of between two and seven identical outcomes. The most common predictions for subsequent events were best described as pragmatic belief updating, expressed as an increasingly strong expectation that a streak of identical signals would repeat as the length of that streak increased. The exception to this pattern was for sequences generated by a random mechanical device with a fixed base rate of.50. Under this specific condition, participants exhibited a bias toward reversal of streaks, and this bias was larger when participants were asked to make a dichotomous choice versus a numerical probability rating. We review alternate accounts for the anomalous judgments of sequences and conclude with our favored interpretation that is based on Rabin's version of Tversky & Kahneman's Law of Small Numbers. (shrink)

The statistics of small samples are often quite different from those of large samples, and this needs to be taken into account in assessing the rationality of human behavior. Specifically, in evaluating human responses to environmental statistics, it is the effective environment that matters; that is, the environment actually experienced by the agent needs to be considered, not simply long‐run frequencies. Significant deviations from long‐run statistics may arise through experiential limitations of the agent that stem from resource constraints and/or information‐processing (...) bounds. The article draws together recent work from a number of areas in judgment and decision making ranging from randomness perception (Hahn & Warren, ), information sampling (Hertwig & Pleskac, ; Kareev et al., ), and consequences of choice for exploration or exploitation (e.g., Denrell, ) to demonstrate how proper consideration of these deviations leads to reevaluation of behaviors that are otherwise deemed irrational. (shrink)

We propose a critique ofnormativism, defined as the idea that human thinking reflects a normative system against which it should be measured and judged. We analyze the methodological problems associated with normativism, proposing that it invites the controversial “is-ought” inference, much contested in the philosophical literature. This problem is triggered when there are competing normative accounts (the arbitration problem), as empirical evidence can help arbitrate between descriptive theories, but not between normative systems. Drawing on linguistics as a model, we propose (...) that a clear distinction between normative systems and competence theories is essential, arguing that equating them invites an “is-ought” inference: to wit, supporting normative “ought” theories with empirical “is” evidence. We analyze in detail two research programmes with normativist features – Oaksford and Chater's rational analysis and Stanovich and West's individual differences approach – demonstrating how, in each case, equating norm and competence leads to an is-ought inference. Normativism triggers a host of research biases in the psychology of reasoning and decision making: focusing on untrained participants and novel problems, analyzing psychological processes in terms of their normative correlates, and neglecting philosophically significant paradigms when they do not supply clear standards for normative judgement. For example, in a dual-process framework, normativism can lead to a fallacious “ought-is” inference, in which normative responses are taken as diagnostic of analytic reasoning. We propose that little can be gained from normativism that cannot be achieved by descriptivist computational-level analysis, illustrating our position with Hypothetical Thinking Theory and the theory of the suppositional conditional. We conclude that descriptivism is a viable option, and that theories of higher mental processing would be better off freed from normative considerations. (shrink)

Normativism, the approach that judges human rationality by comparison against normative standards, has recently come under intensive criticism as unsuitable for psychological enquiry, and it has been suggested that it should be replaced with a descriptivist paradigm. My goal in this paper is to outline and defend a meta-theoretical framework of such a paradigm, grounded rationality, based on the related principles of descriptivism and (moderate) epistemic relativism. Bounded rationality takes into account universal biological and cognitive limitations on human rationality. Grounded (...) rationality accepts universal constraints but adds cognitive variability: Within-individual variability (dual processing), and individual as well as cultural differences. I discuss the implications of grounded rationality to dual processing, proposing that investing limited cognitive resources in analytic processing might be less instrumentally rational for individuals with low cognitive ability. (shrink)

Cognitive science views thought as computation; and computation, by its very nature, can be understood in both rational and mechanistic terms. In rational terms, a computation solves some information processing problem (e.g., mapping sensory information into a description of the external world; parsing a sentence; selecting among a set of possible actions). In mechanistic terms, a computation corresponds to causal chain of events in a physical device (in engineering context, a silicon chip; in biological context, the nervous system). The discipline (...) is thus at the interface between two very different styles of explanation—as the papers in the current special issue well illustrate, it explores the interplay of rational and mechanistic forces. (shrink)

The gambler’s fallacy is the tendency to expect random processes to switch more often than they actually do—for example, to think that after a string of tails, a heads is more likely. It’s often taken to be evidence for irrationality. It isn’t. Rather, it’s to be expected from a group of Bayesians who begin with causal uncertainty, and then observe unbiased data from an (in fact) statistically independent process. Although they converge toward the truth, they do so in an asymmetric (...) way—ruling out “streaky” hypotheses more quickly than “switchy” ones. As a result, the majority (and the average) exhibit the gambler’s fallacy. If they have limited memory, this tendency persists even with arbitrarily-large amounts of data. Indeed, such Bayesians exhibit a variety of the empirical trends found in studies of the gambler’s fallacy: they expect switches after short streaks but continuations after long ones; these nonlinear expectations vary with their familiarity with the causal system; their predictions depend on the sequence they’ve just seen; they produce sequences that are too switchy; and they exhibit greater rates of gambler’s reasoning when forming binary predictions than when forming probability estimates. In short: what’s been thought to be evidence for irrationality may instead be rational responses to limited data and memory. (shrink)

Randomness, a core concept of gambling, is seen in problem gambling as responsible for the formation of the math-related cognitive distortions, especially the Gambler’s Fallacy. In problem-gambling research, the concept of randomness was traditionally referred to as having a mathematical nature and categorized and approached as such. Randomness is not a mathematical concept, and I argue that its weak mathematical dimension is not decisive at all for the randomness-related issues in gambling and problem gambling, including the correction of the misconceptions (...) and fallacies about probability and statistical concepts applied in gambling. I distinguish between mathematical and nonmathematical dimensions of randomness (the epistemic, the theoretical-methodological, the functional, and the ethical) falling within the general concept, and I argue that both the studies having as object the math-related cognitive distortions among gamblers and the educational programs aiming at correcting them should employ this distinction in their design and content. (shrink)