This article is concerned with how we make decisions based on how problems are presented to us and the effect that the framing of the problem might have on our choices. Current philosophical and psychological accounts of the framing effect in experiments such as the Asian Disease Problem concern reference points and domains. We question the importance of reference points and domains. Instead, we adopt a linguistic perspective focussing on the role of the evaluative polarity evoked by the words - (...) negativeand positive - used to describe the options in the decision problem. We show that the evaluative polarity of the different wordings in the ADP better explain participants’ behaviour than reference points and domains. We propose two models in which the values given to evaluative polarity words directly influence the strength of framing. The results indicate that linguistic considerations regarding evaluative polarity have to be considered in relation to the ADP. The account resembles Fuzzy-Trace-Theory but allows for thestrength of evaluative polarity to directly affect behaviour. In the discussion, we also assess how evaluative polarity relates to negation, antonyms and the communicative frame within which the choices are presented. (shrink)

Whereas original prospect theory was introduced over 40 years ago, its formula for multi-outcome prospects has never yet been published, resulting in many misunderstandings. This note provides that formula.

The introduction of the euro gave a unique opportunity to empirically disentangle two components of utility: intrinsic value, a rational component central in economics, and the numerosity effect (going by numbers while ignoring units), a descriptive and irrational component central in prospect theory and underlying the money illusion. We measured relative risk aversion in Belgium before and after the introduction of the euro, and could consider changes in intrinsic value while keeping numbers constant, and changes in numbers while keeping intrinsic (...) value constant. Intrinsic value significantly affected risk aversion, and the numerosity effect did not. Our study is the first to confirm the classical hypothesis of increasing relative risk aversion while avoiding irrational distortions due to the numerosity effect. (shrink)

A persistent argument against the transitivity assumption of rational choice theory postulates a repeatable action that generates a significant benefit at the expense of a negligible cost. No matter how many times the action has been taken, it therefore seems reasonable for a decision-maker to take the action one more time. However, matters are so fixed that the costs of taking the action some large number of times outweigh the benefits. In taking the action some large number of times on (...) the grounds that the benefits outweigh the costs every time, the decision-maker therefore reveals intransitive preferences, since once she has taken it this large number of times, she would prefer to return to the situation in which she had never taken the action at all. We defend transitivity against two versions of this argument: one in which it is assumed that taking the action one more time never has any perceptible cost, and one in which it is assumed that the cost of taking the action, though (sometimes) perceptible, is so small as to be outweighed at every step by the significant benefit. We argue that the description of the choice situation in the first version involves a contradiction. We also argue that the reasoning used in the second version is a form of similarity-based decision-making. We argue that when the consequences of using similarity-based decision-making are brought to light, rational decision-makers revise their preferences. We also discuss one method that might be used in performing this revision. (shrink)

In this paper I aim to examine some problematic implications of the fact that individuals are prone to making systematic reasoning errors, for resource egalitarianism. I begin by disentangling the concepts of preferences, choices and ambitions, which are sometimes used interchangeably by egalitarians. Subsequently, I claim that the most plausible interpretation of resource egalitarianism takes preferences, not choices, as the site of responsibility. This distinction is salient, since preference-sensitive resource egalitarianism is faced with an important objection when applied to situations (...) in which the empirically reasonable assumption that individuals have different degrees of computational abilities is introduced. I first show that this objection can be raised in cases involving individuals who have incomplete information, but that it ultimately fails for such cases since we can appeal to higher order insurance markets in order to mitigate any initial concerns. I further claim, however, that the objection is much more powerful in cases involving individuals who have different reasoning skills, since the appeal to higher order insurance markets is no longer tenable. Consequently, the ideal principle of justice proposed by Dworkin is met with a new feasibility challenge. Finally, I claim that the problem of reasoning errors and various forms of cognitive biases also affect Dworkin’s non-ideal principle of justice, skewing the outputs of the hypothetical insurance mechanism in an unjustifiable manner. (shrink)

Other-perspective taking, distancing, time discounting as well as risk and loss aversion highly affect decision-making. Even though they influence each other, so far these cognitive processes have been unrelated or only partly related to each other in neuroscience. This article proposes a philosophical interpretation of these cognitive processes that is elaborated in the updated theory of Adam Smith’s prudence. The UTSP is inspired by Smith’s account of prudence and is in line with the neuroscientific and behavioral studies on OPT, distancing, (...) time discounting as well as risk and loss aversion. The UTSP represents a framework aiming to interpret and connect these cognitive processes and providing a consistent and empirically sound account of a “Smithianly” prudent style of decision-making. The two pillars of the UTSP are the shift of perspective in space and time and loss aversion. On the basis of this theory, a normative updated theory of Smithian prudence is outlined. The latter is useful for moral philosophy for two reasons: firstly, according to preliminary evidence, it is effective in guiding the agent in decisional contexts in which her well-being is at stake and she can affect other people with her actions. Secondly, since the NUTSP is based on neuroscientific findings on decision-making, it has a sound empirical basis that prevents a source of alienation for the agent. (shrink)

We obtain rich measures of the risk preferences of a sample of Vietnamese farmers, and revisit the link between risk preferences and economic well-being. Far from being particularly risk averse, our farmers are on average risk neutral and, thus, more risk tolerant than typical Western subject populations. This generalises recent findings indicating that students in poorer countries are more risk tolerant than students in richer countries to a general population sample. Risk aversion is, furthermore, negatively correlated with income within our (...) sample, but does not correlate with wealth. This also casts doubt on high levels of risk aversion causing failure to adopt new technologies, which we discuss. (shrink)

The article aims to demonstrate that the nudge theory suffers from three main weaknesses stemming from its theoretical dependence on behavioural economics. The first two weaknesses endanger the paternalistic goal, whereas the third does not justify the libertarian attribute. The first weakness lies in the incomplete realistic characterisation of behavioural economics theory that is the central theoretical pillar of Nudge theory. The second weakness is even more relevant. The normative model of behavioural economics is neoclassical rationality. It can be applied (...) to choices in conditions of risk, when it is possible to forecast the probability of the outcomes of one’s choices. On the contrary the real life problems are inside a complex and uncertain environment. In an uncertain environment the neoclassical algorithms are no longer valid, in that they postulate the knowledge of the probability of the outputs. Thus errors and bias, as observed in behavioural economics, are not such in many instances, but they are instead adaptive and therefore rational responses to the context of decision-making. Therefore nudge theory that pursues the normative paternalistic objective of neutralising the bias and judgement errors discovered by behavioural economics and putting paternalistically the citizen on the right track, is in fact proceeding in the wrong direction. The last weakness concerns an assumption of Nudge theory about the duality of mind. System 1 represents the intuitive mind, while System 2 corresponds to the analytical one. System 1 tends to make decisions quickly and unconsciously, while System 2 follows a slow and conscious process. Biases and judgement errors are mainly generated by System 1. However, System 2 may later intervene to correct them. From this premise, the Nudge theory affirms its libertarian character. In this paper I will argue that the dualism of the mind would not entail the reversibility of some nudges, particularly of default states. In this way the fundamental pillar is weakened to justify the libertarian character of the nudge theory. (shrink)

Probability weighting is a marked feature of decision-making under risk. For poor people in rural areas of developing countries, how probabilities are evaluated matters for livelihoods decisions, especially the probabilities associated with losses. Previous studies of risky choice among poor people in developing countries seldom consider losses and do not offer a refined tracking of the probability-weighting function. We investigate probability weighting among smallholder farmers in Uganda, separately for losses and for gains, using a method that allows refined tracking of (...) the PWF for a population with low levels of literacy. For losses, we find marked probability weighting near zero, which is in line with evidence found in Western labs. For gains, the absence of probability weighting is remarkable, particularly its absence near 100%. We also find marked differences in probability weighting for traditional farmers which are in line with the observed livelihoods strategies in the study area. (shrink)

This paper investigates the relation between consequentialism, as conceived of in moral theory, and standard expected utility theory. I argue that there is a close connection between the two. I show furthermore that consequentialism is not neutral with regard to the values of the agent. Consequentialism, as well as standard expected utility theory, is incompatible with the recognition of considerations that depend on what could have been the case, such as regret and disappointment. I conclude that consequentialism should be rejected (...) as a principle of rational choice and that there are reasons to doubt its plausibility in the realm of moral theory. Moreover, this is a reason to doubt whether standard expected utility theory is a plausible theory of rational choice. (shrink)

In his 2009 monograph, Darwinian Populations and Natural Selection, Peter Godfrey-Smith accuses biologists of demonstrating ‘Darwinian Paranoia’ when they engage in what he dubs ‘agential thinking’. But as Daniel Dennett points out, he offers neither an illuminating set of examples nor an extended argument for this assertion, deeming it to be a brilliant propaganda stroke against what is actually a useful way of thinking. Compared to the dangers of teleological thinking in biology, the dangers of agential thinking have unfortunately rarely (...) been discussed. Drawing on recent work by Samir Okasha, I attempt to remedy this omission, through analyzing the nature of agential thinking, and providing a philosophical treatment of the unexamined dangers in this peculiar, yet tempting way of thinking. (shrink)

Numerous studies have convincingly shown that prospect theory can better describe risky choice behavior than the classical expected utility model because it makes the plausible assumption that risk aversion is driven not only by the degree of sensitivity toward outcomes, but also by the degree of sensitivity toward probabilities. This article presents the results of an experiment aimed at testing whether agents become more sensitive toward probabilities over time when they repeatedly face similar decisions, receive feedback on the consequences of (...) their decisions, and are given ample incentives to reflect on their decisions, as predicted by Plott’s Discovered Preference Hypothesis (DPH). The results of a laboratory experiment with N = 62 participants support this hypothesis. The elicited subjective probability weighting function converges significantly toward linearity when respondents are asked to make repeated choices and are given direct feedback after each choice. Such convergence to linearity is absent in an experimental treatment where respondents are asked to make repeated choices but do not experience the resolution of risk directly after each choice, as predicted by the DPH. (shrink)

Farm animal welfare in livestock production is a topical and important issue attracting growing interest of policy makers, consumers, stakeholders in the supply chain and others. While there is much public interest in the issue this is not reflected in the supply and market shares of animal food products that are produced under welfare standards that exceed legislative requirements. Given the obstacles to devising stricter legislative standards, higher welfare animal food products are mostly made available through market-based approaches. This paper (...) discusses different challenges and opportunities for a range of public and consumer policies and makes recommendations on how these might be strengthened. The paper does not report primary empirical findings but assembles available knowledge on citizen and consumer attitudes and perceptions towards animal welfare from various research disciplines. We argue that in order for public and consumer policies to be (more) efficient and effective, it is important to develop a segmented and targeted strategy. This paper will thus elaborate on what information could and should be provided to whom. This implies the need for a good understanding of how people conceptualize farm animal welfare. Further, information provisioning should address the needs and expectations of those specific consumer segments most likely to be motivated to purchase higher welfare products. Based on the assembled information, opportunities and challenges for information provisioning and communication to the public and consumers are identified. The merits and limitations of different forms of information provisioning and animal welfare labelling are discussed and recommendations are set forth for future research. (shrink)

Institutional economics and discourse theory stand unconnected next to each other, in spite of the fact that they both ask for the legitimacy of institutions (normative) and the functioning and effectiveness of institutions (positive). Both use as theoretical constructions rational individuals and the concept of consensus for legitimacy. Whereas discourse theory emphasizes the conditions of a legitimate consensus and could thus enable institutional economics to escape the infinite regress of judging a consensus legitimate, institutional economics has a tested social science (...) paradigm (rational choice) of explaining and predicting the functioning of institutions. The article outlines a theoretical synthesis of the two theories by finding points in common and possibilities of fruitful combinations concerning the problem of legitimacy, institutional design and effectiveness of legal norms. Key Words: consensus • discourse theory • effectiveness of legal rules • institutional design • legitimacy • new institutional economics. (shrink)

Although agreement on the positive sign of the relationship between corporate social and financial performance is observed in the literature, the mechanisms that constitute this relationship are not yet well-known. We address this issue by extending management’s stakeholder theory by adding insights from psychology’s prospect decision theory and sociology’s resource dependence theory. Empirically, we analyze an extensive panel dataset, including information on disaggregated measures of social performance for the S&P 500 in the 1997–2002 period. In so doing, we enrich the (...) extant literature by focusing on stakeholder heterogeneity, perceptional framing, and disaggregated measures of corporate social performance. (shrink)

Psychological empirical research has shown that human choice behavior often violates the assumptions of classical rational choice models. In the last few decades a new research field has emerged which aims to account for the observed choice behavior by resorting to the concepts and mathematical techniques developed in the realm of quantum physics, such as the “mental state vector” defined in a Hilbert space and the interference of quantum probability. This article is a short introduction to the quantum-like approach to (...) the description of cognitive processes. I argue that the mathematical apparatus of quantum physics can account for the observed violations of classical logic and can help develop effective models of psychological and cognitive phenomena. This is illustrated through the so-called conjunction and disjunction fallacies by providing an alternative interpretation of the results of Linda test and Hawaii test. No-fallacy configurations are made possible in the quantum-like approach by sequential modeling of mental states transitions. (shrink)

To what extent are people able to make predictions about other people’s preferences and values? We report two experiments that present a novel method assessing some of the basic processes in surrogate decision-making, namely surrogate-utility estimation. In each experiment participants formed dyads who were asked to assign utilities to health related items and commodity items, and to predict their partner’s utility judgments for the same items. In experiment one we showed that older adults in long-term relationships were able to accurately (...) predict their partner’s wishes. In experiment two we showed that younger adults who were relatively unfamiliar with one another were also able to predict other people’s wishes. Crucially we demonstrated that these judgments were accurate even after partialling out each participant’s own preferences indicating that in order to make surrogate utility estimations people engage in perspective-taking rather than simple anchoring and adjustment, suggesting that utility estimation is not the cause of inaccuracy in surrogate decision-making. The data and implications are discussed with respect to theories of surrogate decision-making. (shrink)

ABSTRACTThe financial crisis of 2008 was unforeseen partly because the academic theories that underpin policy making do not sufficiently account for uncertainty and complexity or learned and evolved human capabilities for managing them. Mainstream theories of decision making tend to be strongly normative and based on wishfully unrealistic “idealized” modeling. In order to develop theories of actual decision making under uncertainty, we need new methodologies that account for how human actors often manage uncertain situations “well enough.” Some possibly helpful methodologies, (...) drawing on digital science, focus on the role of emotions in determining people's choices; others examine how people construct narratives that enable them to act; still others combine qualitative with quantitative data. (shrink)

The Monty Hall Dilemma (MHD) is a two-step decision problem involving counterintuitive conditional probabilities. The first choice is made among three equally probable options, whereas the second choice takes place after the elimination of one of the non-selected options which does not hide the prize. Differing from most Bayesian problems, statistical information in the MHD has to be inferred, either by learning outcome probabilities or by reasoning from the presented sequence of events. This often leads to suboptimal decisions and erroneous (...) probability judgments. Specifically, decision makers commonly develop a wrong intuition that final probabilities are equally distributed, together with a preference for their first choice. Several studies have shown that repeated practice enhances sensitivity to the different reward probabilities, but does not facilitate correct Bayesian reasoning. However, modest improvements in probability judgments have been observed after guided explanations. To explain these dissociations, the present review focuses on two types of causes producing the observed biases: Emotional-based choice biases and cognitive limitations in understanding probabilistic information. Among the latter, we identify a crucial cause for the universal difficulty in overcoming the equiprobability illusion: Incomplete representation of prior and conditional probabilities. We conclude that repeated practice and/or high incentives can be effective for overcoming choice biases, but promoting an adequate partitioning of possibilities seems to be necessary for overcoming cognitive illusions and improving Bayesian reasoning. (shrink)

We present a formal analysis of Douglas Hofstadter’s concept of superrationality. We start by defining superrationally justifiable actions, and study them in symmetric games. We then model the beliefs of the players, in a way that leads them to different choices than the usual assumption of rationality by restricting the range of conceivable choices. These beliefs are captured in the formal notion of type drawn from epistemic game theory. The theory of coalgebras is used to frame type spaces and to (...) account for the existence of some of them. We find conditions that guarantee superrational outcomes. (shrink)

When assessing the cost effectiveness of health care programmes, health economists typically presume that distant events should be given less weight than present events. This article examines the moral reasonableness of arguments advanced for positive discounting in cost-effectiveness analysis both from an intergenerational and an intrapersonal perspective and assesses if arguments are equally applicable to health and monetary outcomes. The article concludes that behavioral effects related to time preferences give little or no reason for why society at large should favour (...) the present over the future when making intergenerational choices regarding health. The strongest argument for discounting stems from the combined argument of diminishing marginal utility in the presence of growth. However, this hinges on the assumption of actual growth in the relevant good. Moreover, current modern democracy may be insufficiently sensitive to the concerns of future generations. The second part of the article categorises preference failures (which justify paternalistic responses) into two distinct groups, myopic and acratic. The existence of these types of preference failures makes elicited time preferences of little normative relevance when making decisions regarding the social discount rate, even in an intrapersonal context. As with intergenerational discounting, the combined arguments of growth and diminishing marginal utility offer the strongest arguments for discounting in the intrapersonal context. However, there is no prima facie reason to assume that this argument should apply equally to health and monetary values. To be sure, selecting an approach towards discounting health is a complex matter. However, the life-or-death implications of any approach require that the discussion not be downplayed to merely a technical matter for economists to settle. (shrink)

There is a fundamental divergence of opinion between the EU and the US over how food products derived from genetically modified organisms should be labeled. This has less to do with safety, as moves towards the international harmonization of safety standards continue apace, and rather more to do with the consumers' right to know about the origins of the food they are consuming. This paper uses a framework drawn from the global public goods (GPG) literature of economics and the work (...) by international relations theorists on formal international organizations (FIO) to explain why there is presently no global consensus on the manner (voluntary or mandatory) in which GM food products should be labeled. (shrink)

Gamification is an increasingly common marketing tool. Yet, to date, there has been little examination of its ethical implications. In light of the potential implications of this type of stealth marketing for consumer welfare, this paper discusses the ethical dilemmas raised by the use of gamified approaches to marketing. The paper draws on different schools of ethics to examine gamification as an overall system, as well as its constituent parts. This discussion leads to a rationale and suggestions for how gamification (...) could be regulated and/or controlled by more informal codes of conduct. The paper ends by outlining a practical framework which businesses can use to evaluate the potential ethical implications raised by their own gamified marketing techniques. (shrink)

ABSTRACT The illusion of explanatory depth, which has been identified by cognitive psychologists, may play a prominent role in encouraging regulatory action. This special type of overconfidence would logically lead regulators to believe that they are aware of the relevant causes and consequences of the activities they might regulate, and of the unintended side effects of the regulatory actions they are contemplating. So, as with other cognitive biases, the illusion of explanatory depth is likely to lead to mistakes. And unlike (...) the biases that have been the focus of so much behavioral economics, the illusion of explanatory depth is uniquely resistant to correction by those who are aware of it as a general problem and rigorously attempt to keep it under control. (shrink)

Prospect theory predicts a four-fold risk attitude, which means that people are risk seeking for low-probability gain and high-probability loss and risk averse for low-probability loss and high-probability gain because they overweight probability when it is low. The four-fold pattern of risk attitude has been supported by several former studies with mainstream industrialized populations but has never previously been tested in a non-industrialized society. In this work, we examined the robustness of the four-fold risk attitude in the DuLong minority ethnicity (...) in China, which is a small society with only 4,000 members that is isolated from modern civilization. We used simple lotteries for gain and loss with different probabilities to elicit the risk attitude of 37 DuLong villagers. Our results support prospect theory predictions in that DuLong people are risk seeking for low-probability gain and risk averse for low-probability loss. However, although they showed a tendency to decrease their degree of risk seeking for gain, their risk attitude did not reverse when the probability of the prospect increased to 50%. In summary, our results suggest a right-shifted weighting function in this non-industrialized small society. The deviation might be caused by the particular living situation of the DuLong people, their sensitivity to monetary payoffs, and the elicitation procedure. (shrink)

This study puts forward a rounder conceptual model for interpreting short and long-term effects of choice behavior. Kahneman’s (2011) distinction between cognitive processing System 1 and System 2 reflect the more rigorous distinction between Brief and Immediate and Extended and Elaborated Relational Responding. Specifically, we provide theoretical accounts and applied examples of how nudging, or the manipulation of environmental contingencies, works on the creation and modification of relational frames. The subset denominated educational nudges, or boosts, are particularly useful towards their (...) maintenance. We define and illustrate the fundamental mediating role of verbal behavior towards formulating rules, which inform and guide choice behavior over time. Furthermore, we suggest adopting the Implicit Relations Association Procedure to inform how coherent and immediate responding to new relational frames may be, whenever choices need be made. We provide empirical accounts of consumer behavior, stereotypy and prejudices, eating behavior, and overcoming cognitive biases. The conclusions depict a promising way forward towards an improved model for interpreting and overcoming human errors thanks to changes in the contingencies of choice behavior. (shrink)

Consumers can have difficulty expressing their buying intentions on an explicit level. The most common explanation for this intention-action gap is that consumers have many cognitive biases that interfere with decision making. The current resource-rational approach to understanding human cognition, however, suggests that brain environment interactions lead consumers to minimize the expenditure of cognitive energy. This means that the consumer seeks as simple of a solution as possible for a problem requiring decision making. In addition, this resource-rational approach to decision (...) making emphasizes the role of the principle of Occam’s Razor, inductive inference, and Bayesian reasoning by illuminating the human-environment relationship. This paper introduces the Consumer Contextual Decision-Making Model (CCDMM). Based on the CCDMM, two hypothetical strategies of consumer decision making will be presented. First, the SIMilarity-Strategy (SIMS) is one in which most of a consumer’s decisions in a real-life context are based on prior beliefs about the role of a commodities specific to real-life situation being encountered. Because beliefs are based on previous experiences, consumers are already aware of the most likely consequences of their actions. At the same time, they do not waste time on developing contingencies for what, based on previous experience, is unlikely to happen. Second, the What-is-Out-there-in-the-World-Strategy (WOWS) is one in which prior beliefs do not work in a real-life situation, requiring consumers to update their beliefs. The principle argument being made is that most experimental consumer research describes decision making based on the WOWS, when participants cannot apply their previous knowledge and situation-based strategy to problems. The article analyses sensory and cognitive biases described by behavioral economists from a CCDMM perspective, followed by a description and explanation of the typical intention-action gap based on the model. Prior to a section dedicated to discussion, the neuroeconomic approach will be described along with the valuation network of the brain, which has evolved to solve problems that the human has previously encountered in an information-rich environment. The principles of brain functions will also be compared to CCDMM. Finally, different approaches and the future direction of consumer research from a contextual point of view will be presented. (shrink)

Individuals often fail to accurately predict others’ decisions in a risky environment. In this paper, we investigate the characteristics and causes of this prediction discrepancy. Participants completed a risky decision-making task mixed with different domains (gain vs. loss) and probabilities (small vs. large), with some participants making decisions for themselves (the actor) and the others predicting the actors’ decisions (the predictor). The results demonstrated a prediction discrepancy: predictions were more risk-averse than the actual decisions over small-probability gains and more risk-seeking (...) over large-probability gains, while these patterns were reversed in the loss domain. Reported and predicted levels of emotional stimulation revealed a pattern that is consistent with the notion of risk-as-feelings and empathy gaps. Mediation analysis provided strong evidence that such prediction discrepancy is driven mainly by the predictor’s underestimate of the intensity (not the impact) of the actor’s emotional state. (shrink)

Knowledge sharing is the major driving force to maintain enterprises’ competitiveness. This study extends the current knowledge-sharing research by considering knowledge sharing as comprising four types: automatic response, rational reflection, ridiculed reflection, and deprived reflection, based on Kahneman’s types of system thinking. Drawing on the motivation-action-outcome model, this study explored how individuals’ intrinsic motivation can guide the action of knowledge sharing and reflect the outcome of creative self-efficacy in intelligent transportation jobs. By snowball sampling in intelligent transportation companies, a total (...) of 232 effective questionnaires were collected, and confirmatory factor analysis with structural equation modeling was performed. The research results showed that: intrinsic motivation was positively related to the four types of knowledge sharing tendencies; automatic response was not significantly related to creative self-efficacy; rational reflection was positively associated with creative self-efficacy; but ridiculed and deprived reflection were negatively related to creative self-efficacy. These results can be applied to encourage employees to practice rational reflection in knowledge sharing to enhance their creative self-efficacy in intelligent transportation jobs. (shrink)

I reconsider Bleichrodt, Pinto Prades and Wakker’s 2001 paper about eliciting utility measures from stated preference surveys. That paper pioneers a method that is now widely used in behavioural economics to correct individuals’ ‘biases’ and to recover their ‘true preferences’. However, BPW propose this method as way of dealing with inconsistent responses to stated preference surveys, in contrast to more recent applications which aim to help individuals to avoid supposed mistakes in their private choices. I argue that the concepts of (...) true preference and bias are empirically ungrounded, but that BPW’s approach can be interpreted as not invoking those concepts. By ‘regularising’ preferences revealed in actual choice, this approach constructs measures of individual welfare that are broadly aligned with actual preferences and consistent with normative standards of rationality that are appropriate for public decision-making. Public decision-makers’ normative judgements are made explicit, rather than being disguised as apparently empirical claims about true preferences. (shrink)

Despite the recent emergence of many new ethical decision making models, there has been minimal emphasis placed on the impact of escalating commitment on the ethical decision making process. In this paper a new variable is introduced into the ethical decision making literature. This variable, exposure to escalation situations, is posited to increase the likelihood that individuals will choose unethical decision alternatives. Further, it is proposed that escalation situations should be included as a variable in Jones's (1991) comprehensive model of (...) ethical decision making. Finally, research propositions are provided based on the relationship between escalating commitment and the ethical decision making process. (shrink)

This paper presents an integrative, descriptive model of ethical decision making, with special attention given to issues of measurement. After building the model, hypotheses are developed from a portion of it. These hypotheses are tested in an exploratory analysis to determine if further research and testing of this model and the measurement instruments it employs are warranted.

Several attempts have been made previously to provide a biological grounding for cognitive architectures by relating their components to the computations of specific brain circuits. Often, the architecture's action selection system is identified with the basal ganglia. However, this identification overlooks one of the most important features of the basal ganglia—the existence of a direct and an indirect pathway that compete against each other. This characteristic has important consequences in decision-making tasks, which are brought to light by Parkinson's disease as (...) well as genetic differences in dopamine receptors. This paper shows that a standard model of action selection in a cognitive architecture cannot replicate any of these findings, details an alternative solution that reconciles action selection in the architecture with the physiology of the basal ganglia, and extends the domain of application of cognitive architectures. The implication of this solution for other architectures and existing models are discussed. (shrink)

According to the orthodox treatment of risk preferences in decision theory, they are to be explained in terms of the agent's desires about concrete outcomes. The orthodoxy has been criticised both for conflating two types of attitudes and for committing agents to attitudes that do not seem rationally required. To avoid these problems, it has been suggested that an agent's attitudes to risk should be captured by a risk function that is independent of her utility and probability functions. The main (...) problem with that approach is that it suggests that attitudes to risk are wholly distinct from people's (non-instrumental) desires. To overcome this problem, we develop a framework where an agent's utility function is defined over chance propositions (i.e., propositions describing objective probability distributions) as well as ordinary (non-chance) ones, and argue that one should explain different risk attitudes in terms of different forms of the utility function over such propositions. (shrink)

In a controlled laboratory experiment we use one sample of college students and one of mature executives to investigate how positive skew influences risky choices. In reduced-form regressions we find that both students and executives make riskier choices when lotteries display positive skew. We estimate decision models to explore three explanations for skew seeking choices: risk-loving, optimism and likelihood insensitivity. We find no role for love for risk as neither students nor executives have convex utility. Both optimism and likelihood insensitivity (...) play a part in skew seeking choices. Likelihood insensitivity is larger for students than for executives. Executives have more concave utility and are more optimistic than students, but this is found to be largely due to them being older. (shrink)

A moderately risk averse person may turn down a 50/50 gamble that either results in her winning $200 or losing $100. Such behaviour seems rational if, for instance, the pain of losing $100 is felt more strongly than the joy of winning $200. The aim of this paper is to examine an influential argument that some have interpreted as showing that such moderate risk aversion is irrational. After presenting an axiomatic argument that I take to be the strongest case for (...) the claim that moderate risk aversion is irrational, I show that it essentially depends on an assumption that those who think that risk aversion can be rational should be skeptical of. Hence, I conclude that risk aversion need not be irrational. (shrink)

Orthodox expected utility theory imposes too stringent restrictions on what attitudes to risk one can rationally hold. Focusing on a life-and-death gamble, I identify as the main culprit the theory’s Linearity property, according to which the utility of a particular change in the risk of a bad outcome is independent of the original level of risk. Finally, I argue that a recent non-standard Bayesian decision theory, that does not have this property, handles risky gambles better than the orthodox theory.