When we ask a decision maker to express her preferences, it is typically assumed that we are eliciting a pre-existing set of preferences. However, empirical research has suggested that our preferences are often constructed on the fly for the decision problem at hand. This paper explores the ramifications of this empirical research for our understanding of instrumental rationality. First, I argue that these results pose serious challenges for the traditional decision-theoretic view of instrumental rationality, which demands global coherence amongst all (...) of one's beliefs and desires. To address these challenges, I first develop a minimal notion of instrumental rationality that issues in localized, goal-relative demands of coherence. This minimal conception of instrumental rationality is then used to offer a more sophisticated account of the global aspects of instrumental rationality. The resulting view abandons all-or-nothing assessments of rationality and allows us to evaluate decision makers as being rational to varying degrees. My aim is to propose a theory that is both psychologically and normatively plausible. (shrink)

I investigate whether degreed beliefs are able to play the predictive, explanatory, and modeling roles that they are frequently taken to play. The investigation focuses on evidence—both from sources familiar in epistemology as well as recent work in behavioral economics and cognitive psychology—of variability in agents' apparent degrees of belief. Although such variability has been noticed before, there has been little philosophical discussion of its breadth or of the psychological mechanisms underlying it. Once these are appreciated, the inadequacy of degrees (...) of belief becomes clear. I offer a theoretical alternative to degrees of belief, what I call the filter theory. (shrink)

A central question in many debates on paternalism is whether a decision analyst can ever go against the stated preference of a client, even if merely intending to improve the decisions for the client. Using four gedanken-experiments, this paper shows that this central question, so cleverly and aptly avoided by libertarian paternalism (nudge), cannot always be avoided. The four thought experiments, while purely hypothetical, serve to raise and specify the critical arguments in a maximally clear and pure manner. The first (...) purpose of the paper is, accordingly, to provide a litmus test on the readers’ stance on paternalism. We thus also survey and organize the various stances in the literature. The secondary purpose of this paper is to argue that paternalism cannot always be avoided and consumer sovereignty cannot always be respected. However, this argument will remain controversial. (shrink)

Social scientists are often interested in understanding how the dynamics of social systems are driven by the behavior of individuals that make up those systems. However, this process is hindered by the difficulty of experimentally studying how individual behavioral tendencies lead to collective social dynamics in large groups of people interacting over time. In this study, we investigate the role of social influence, a process well studied at the individual level, on the puzzling nature of success for cultural products such (...) as books, movies, and music. Using a “multiple‐worlds” experimental design, we are able to isolate the causal effect of an individual‐level mechanism on collective social outcomes. We employ this design in a Web‐based experiment in which 2,930 participants listened to, rated, and downloaded 48 songs by up‐and‐coming bands. Surprisingly, despite relatively large differences in the demographics, behavior, and preferences of participants, the experimental results at both the individual and collective levels were similar to those found in Salganik, Dodds, and Watts (2006). Further, by comparing results from two distinct pools of participants, we are able to gain new insights into the role of individual behavior on collective outcomes. We conclude with a discussion of the strengths and weaknesses of Web‐based experiments to address questions of collective social dynamics. (shrink)

Libertarian paternalism's notion of “nudging” refers to steering individual decision making so as to make choosers better off without breaching their free choice. If successful, this may offer an ideal synthesis between the duty to respect patient autonomy and that of beneficence, which at times favors paternalistic influence. A growing body of literature attempts to assess the merits of nudging in health care. However, this literature deals almost exclusively with health policy, while the question of the potential benefit of nudging (...) for the practice of informed consent has escaped systematic analysis. This article focuses on this question. While it concedes that nudging could amount to improper exploitation of cognitive weaknesses, it defends the practice of nudging in a wide range of other conditions. The conclusion is that, when ethically legitimate, nudging offers an important new paradigm for informed consent, with a special potential to overcome the classical dilemma between paternalistic beneficence and respect for autonomy. (shrink)

To desire is to be in a particular state of mind. It is a state of mind familiar to everyone who has ever wanted to drink water or desired to know what has happened to an old friend, but its familiarity does not make it easy to give a theory of desire. Controversy immediately breaks out when asking whether wanting water and desiring knowledge are, at bottom, the same state of mind as others that seem somewhat similar: wishing never to (...) have been born, preferring mangoes to peaches, craving gin, having world conquest as one's goal, having a purpose in sneaking out to the shed, or being inclined to provoke just for the sake of provocation. These varied states of mind have all been grouped together under the heading of ‘pro attitudes’, but whether the pro attitudes are fundamentally one mental state or many is disputed. (shrink)

This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.

Infallibilism leads to skepticism, and fallibilism is plagued by the threshold problem. Within this narrative, the pragmatic turn in epistemology has been marketed as a way for fallibilists to address the threshold problem. In contrast, pragmatic versions of infallibilism have been left unexplored. However, I propose that going pragmatic offers the infallibilist a way to address its main problem, the skeptical problem. Pragmatic infallibilism, however, is committed to a shifty view of epistemic certainty, where the strength of a subject’s epistemic (...) state can vary depending upon the practical context. Pragmatic views of epistemic strength are quite radical so the argumentative goal of my discussion is to argue for its plausibility, thereby arguing for the plausibility of pragmatic infallibilism. To do so, I discuss the role that the framing of decision problems and the construction of our deliberative attitudes have in our theories of rational choice. And I explore a way in which these necessary components of a normative theory of rationality can be used to motivate pragmatic views of evidential support. Finally, since the plausibility of our pragmatic account will depend upon the plausibility of a constructive account of rational choice, I conclude by comparing the adequacy of the constructive account with orthodox Bayesian and knowledge-based accounts. (shrink)

Determining the precise nature of the connection between preference, choice, and welfare has arguably been the central project in the field of welfare economics, which aims to offer a proper guide for economists in the making of policy decisions that affect people’s welfare. The two leading approaches here historically – the revealed preference and latent preference approaches – seem equally incapable of so guiding economists. I argue that the deadlock here is due to welfare economists’ failure to recognize a crucial (...) distinction between two senses of “preference.” I analyze and defend these senses of “preference,” and argue that each shares a close connection with just one of choice and welfare. This analysis reveals how economists should conceive of both the connections between “preference,” choice, and welfare, and the proper roles of these concepts in welfare economics. I conclude by showing this analysis to best explain the plausibility of two leading alternative approaches from Hausman and Sugden. (shrink)

An effective method to increase the number of potential cadaveric organ donors is to make people donors by default with the option to opt out. This non-coercive public policy tool to influence people’s choices is often justified on the basis of the as-judged-by-themselves principle: people are nudged into choosing what they themselves truly want. We review three often hypothesized reasons for why defaults work and argue that the as-judged-by-themselves principle may hold only in two of these cases. We specify further (...) conditions for when the principle can hold in these cases and show that whether those conditions are met is often unclear. We recommend ways to expand nationwide surveys to identify the actual reasons for why defaults work and discuss mandated choice policy as a viable solution to many arising conundrums. (shrink)

In this dissertation, I construct scientifically and practically adequate moral analogs of cognitive heuristics and biases. Cognitive heuristics are reasoning “shortcuts” that are efficient but flawed. Such flaws yield systematic judgment errors—i.e., cognitive biases. For example, the availability heuristic infers an event’s probability by seeing how easy it is to recall similar events. Since dramatic events, such as airplane crashes, are disproportionately easy to recall, this heuristic explains systematic overestimations of their probability (availability bias). The research program on cognitive heuristics (...) and biases (e.g., Daniel Kahneman’s work) has been scientifically successful and has yielded useful error-prevention techniques—i.e., cognitive debiasing. I attempt to apply this framework to moral reasoning to yield moral heuristics and biases. For instance, a moral bias of unjustified differences in the treatment of particular animal species might be partially explained by a moral heuristic that dubiously infers animals’ moral status from their aesthetic features. While the basis for identifying judgments as cognitive errors is often unassailable (e.g., per violating laws of logic), identifying moral errors seemingly requires appealing to moral truth, which, I argue, is problematic within science. Such appeals can be avoided by repackaging moral theories as mere “standards-of-interest” (a la non-normative metrics of purportedly right-making features/properties). However, standards-of-interest do not provide authority, which is needed for effective debiasing. Nevertheless, since each person deems their own subjective morality authoritative, subjective morality (qua standard-of-interest and not moral subjectivism) satisfies both scientific and practical concerns. As such, (idealized) subjective morality grounds a moral analog of cognitive biases—namely, subjective moral biases (e.g., committed anti-racists unconsciously discriminating). I also argue that "cognitive heuristic" is defined by its contrast with rationality. Consequently, heuristics explain biases, which are also so defined. However, such contrasting with rationality is causally irrelevant to cognition. This frustrates the presumed usefulness of the kind, heuristic, in causal explanation. As such, in the moral case, I jettison the role of causal explanation and tailor categories solely for contrastive explanation. As such, “moral heuristic” is replaced with "subjective moral fallacy," which is defined by its contrast with subjective morality and explains subjective moral biases. The resultant subjective moral biases and fallacies framework can undergird future empirical research. (shrink)

Chapter 1 of this book argued that moral philosophy should be based on seven principles of theory selection adapted from the sciences. Chapter 2 argued that these principles support basing normative moral philosophy on a particular problem of diachronic instrumental rationality: the ‘problem of possible future selves.’ Chapter 3 argued that a new moral principle, the Categorical-Instrumental Imperative, is the rational solution to this problem. Chapter 4 argued that the Categorical-Instrumental Imperative has three equivalent formulations akin to but superior to (...) Kant’s formulations of the Categorical Imperative. Chapter 5 argued that my principle’s three formulations make it rational to adopt a Moral Original Position to derive moral principles. The present chapter derives Four Principles of Fairness from the Moral Original Position--principles of coercion minimization, mutual assistance, fair negotiation, and virtue—and unifies them into a single principle of rightness: Rightness as Fairness. Finally, this chapter argues that Rightness as Fairness entails a novel approach to applied ethics called ‘principled fair negotiation’, illustrating how the theory provides a plausible new framework for addressing applied cases including lying, suicide, trolleys, torture, distribution of scarce resources, poverty, and the ethical treatment of animals. (shrink)

Interactions between an intelligent software agent and a human user are ubiquitous in everyday situations such as access to information, entertainment, and purchases. In such interactions, the ISA mediates the user’s access to the content, or controls some other aspect of the user experience, and is not designed to be neutral about outcomes of user choices. Like human users, ISAs are driven by goals, make autonomous decisions, and can learn from experience. Using ideas from bounded rationality, we frame these interactions (...) as instances of an ISA whose reward depends on actions performed by the user. Such agents benefit by steering the user’s behaviour towards outcomes that maximise the ISA’s utility, which may or may not be aligned with that of the user. Video games, news recommendation aggregation engines, and fitness trackers can all be instances of this general case. Our analysis facilitates distinguishing various subcases of interaction, as well as second-order effects that might include the possibility for adaptive interfaces to induce behavioural addiction, and/or change in user belief. We present these types of interaction within a conceptual framework, and review current examples of persuasive technologies and the issues that arise from their use. We argue that the nature of the feedback commonly used by learning agents to update their models and subsequent decisions could steer the behaviour of human users away from what benefits them, and in a direction that can undermine autonomy and cause further disparity between actions and goals as exemplified by addictive and compulsive behaviour. We discuss some of the ethical, social and legal implications of this technology and argue that it can sometimes exploit and reinforce weaknesses in human beings. (shrink)

In recent years, some epistemologists have argued that practical factors can make the difference between knowledge and mere true belief. While proponents of this pragmatic thesis have proposed necessary and sufficient conditions for knowledge, it is striking that they have failed to address Gettier cases. As a result, the proposed analyses of knowledge are either lacking explanatory power or susceptible to counterexamples. Gettier cases are also worth reflecting on because they raise foundational questions for the pragmatist. Underlying these challenges is (...) the fact that pragmatic epistemologies not only rely upon normative theories of rational choice but also require externalist standards to rule out epistemic luck. Unfortunately, we lack adequate externalist theories of rational choice. In response, I address these foundational challenges by offering the outlines of an externalist decision theory. While this task is an ambitious one that I cannot hope to complete, I survey the outlines of a decision-theoretic framework on which a richer pragmatic epistemology can be developed. My hope is that this framework opens up new avenues of exploration for the pragmatic epistemologist. (shrink)

Some recent arguments for paternalist government interventions have been based in empirical results in psychology and behavioral economics that would seem to show that adult human beings are far removed from the ideals of rationality presupposed by much of philosophical and economic theory. In this paper it is argued that we need to move to a different conception of human decision-making competence than the one that lies behind that common line of philosophical and economic thinking, and which actually still lies (...) in the background of some of these recent approaches to paternalist interventions. An alternative picture of human decision-making competence is outlined and four criteria for identifying areas where paternalist interventions have a basic moral and political legitimacy are then identified on the basis of this picture. (shrink)

This volume presents research that integrates decision making and creativity within the social contexts in which these processes occur. The volume is an essential addition to and expansion of recent approaches to decision making. Such approaches attempt to incorporate more of the psychological and socio-cultural context in which human decision making takes place. The authors come from different disciplines and also belong to a broad spectrum of research traditions. They present innovative chapters dealing with both theoretical and empirical aspects of (...) decision making in different personal and organizational contexts. All chapters are written from the perspective that human decision making is inherently social and more or less creative. The volume addresses fundamental questions about the nature of human decision making as it occurs in different social contexts. Thereby, it becomes essential reading for researchers in decision making and for advanced students in psychology, management science, informatics, and related disciplines. (shrink)

In this paper I analyse different justifications for the claim that the minor premise of the libertarian argument is true, namely, intuition, van Inwagen’s argument from moral responsibility and an argument from rationality. I claim none of these is satisfactory. I conclude by suggesting a possible way of interpreting the meaning of the free will intuition libertarians claim we have.

The trend in environmental management toward more adaptive, community-based, and holistic approaches will require new approaches to environmental valuation. In this paper, we offer a new valuation approach, one that embodies the core principles of adaptive management, which is experimental, multi-scalar, and place-based. In addition, we use hierarchy theory to incorporate spatial and temporal variability of natural systems into a multi-scalar management model. Our approach results in the consideration of multiple values within community-based ecosystem management, rather than an attempt to (...) maximise a single variable such as economic efficiency. We then offer two heuristics – one procedural and one evaluative – to guide a community toward shared goals, and to develop indicators to measure progress toward these goals. We illustrate our approach by application to environmental and developmental decisions in the Southern Appalachians. (shrink)

Classical (Bayesian) probability (CP) theory has led to an influential research tradition for modeling cognitive processes. Cognitive scientists have been trained to work with CP principles for so long that it is hard even to imagine alternative ways to formalize probabilities. However, in physics, quantum probability (QP) theory has been the dominant probabilistic approach for nearly 100 years. Could QP theory provide us with any advantages in cognitive modeling as well? Note first that both CP and QP theory share the (...) fundamental assumption that it is possible to model cognition on the basis of formal, probabilistic principles. But why consider a QP approach? The answers are that (1) there are many well-established empirical findings (e.g., from the influential Tversky, Kahneman research tradition) that are hard to reconcile with CP principles; and (2) these same findings have natural and straightforward explanations with quantum principles. In QP theory, probabilistic assessment is often strongly context- and order-dependent, individual states can be superposition states (that are impossible to associate with specific values), and composite systems can be entangled (they cannot be decomposed into their subsystems). All these characteristics appear perplexing from a classical perspective. However, our thesis is that they provide a more accurate and powerful account of certain cognitive processes. We first introduce QP theory and illustrate its application with psychological examples. We then review empirical findings that motivate the use of quantum theory in cognitive theory, but also discuss ways in which QP and CP theories converge. Finally, we consider the implications of a QP theory approach to cognition for human rationality. (shrink)

This article examines methodological individualism in terms of the theory that invariance under intervention is the signal feature of generalizations that serve as a basis for causal explanation. This theory supports the holist contention that macro-level generalizations can explain, but it also suggests a defense of methodological individualism on the grounds that greater range of invariance under intervention entails deeper explanation. Although this individualist position is not threatened by multiple-realizability, an argument for it based on rational choice theory is called (...) into question by experimental results concerning preference reversals. Key Words: methodological individualism • mechanisms • explanation • invariance • preference reversal. (shrink)

Consumer autonomy is a fundamental topic for marketing ethics scholars. Nonetheless, autonomy’s philosophical treatment may have compromised its conceptual clarity. After reviewing the relevant ethics literature on consumer autonomy, the benefits of formally defining consumer autonomy are illustrated, and a novel formalization is adapted from potential performance theory mathematics. The goal is to transfigure a hitherto amorphous topic via a mathematical formalization that defines true autonomy, actual autonomy, reliability of wills, and reliability of product choice. The crucial and surprising result: (...) an action that decreases true autonomy can increase actual autonomy if that action engenders a sufficient increase in one or both types of reliability. Relating the insights from the formalization to the long-standing debates in consumer autonomy suggests fruitful avenues for future research. (shrink)

Normative ethics usually presupposes background accounts of human agency, and although different ethical theorists might have different pictures of human agency in mind, there is still something like a standard account that most of mainstream normative ethics can be understood to rest on. Ethical theorists tend to have Rational Man, or at least some close relative to him, in mind when constructing normative theories. It will be argued here that empirical findings raise doubts about the accuracy of this kind of (...) account; human beings fall too far short of ideals of rationality for it to be meaningful to devise normative ideals within such a framework. Instead, it is suggested, normative ethics could be conducted more profitably if the idea of unifying all ethical concerns into one theoretical account is abandoned. This disunity of ethical theorizing would then match the disunited and heuristic-oriented nature of our agency. (shrink)

Individual differences on a variety of framing and conjunction problems were examined in light of Slovic and Tversky's (1974) understanding/acceptance principle-that more reflective and skilled reasoners are more likely to affirm the axioms that define normative reasoning and to endorse the task construals of informed experts. The predictions derived from the principle were confirmed for the much discussed framing effect in the Disease Problem and for the conjunction fallacy on the Linda Problem. Subjects of higher cognitive ability were disproportionately likely (...) to avoid each fallacy. Other framing problems produced much more modest levels of empirical support. It is conjectured that the varying patterns of individual differences are best explained by two-process theories of reasoning (e.g. Evans, 1984, 1996; Sloman, 1996) conjoined with the assumption that the two processes differentially reflect interactional and analytic intelligence. (shrink)

We present a theory of decision by sampling (DbS) in which, in contrast with traditional models, there are no underlying psychoeconomic scales. Instead, we assume that an attribute’s subjective value is constructed from a series of binary, ordinal comparisons to a sample of attribute values drawn from memory and is its rank within the sample. We assume that the sample reflects both the immediate distribution of attribute values from the current decision’s context and also the background, real-world distribution of attribute (...) values. DbS accounts for concave utility functions; losses looming larger than gains; hyperbolic temporal discounting; and the overestimation of small probabilities and the underestimation of large probabilities. Ó 2005 Elsevier Inc. All rights reserved. (shrink)

The various behavioral disciplines model human behavior in distinct and incompatible ways. Yet, recent theoretical and empirical developments have created the conditions for rendering coherent the areas of overlap of the various behavioral disciplines. The analytical tools deployed in this task incorporate core principles from several behavioral disciplines. The proposed framework recognizes evolutionary theory, covering both genetic and cultural evolution, as the integrating principle of behavioral science. Moreover, if decision theory and game theory are broadened to encompass other-regarding preferences, they (...) become capable of modeling all aspects of decision making, including those normally considered “psychological,” “sociological,” or “anthropological.” The mind as a decision-making organ then becomes the organizing principle of psychology. (Published Online April 27 2007) Key Words: behavioral game theory; behavioral science; evolutionary theory; experimental psychology; gene-culture coevolution; rational actor model; socialization. (shrink)

Accelerating environmental uncertainty and the need to cope with increasingly complex market and social demands, combine to create high value for the intuitive approach to decision-making at the strategic level. Research on intuition suffers from marked fragmentation, due to the existence of disciplinary silos based on diverse, apparently irreconcilable, ontological and epistemological assumptions. Not surprisingly, there is no integrated interdisciplinary framework suitable for a rich account of intuition, contemplating how affect and cognition intertwine in the intuitive process, and how intuition (...) scales up from the individual to collective decision-making. This study contributes to the construction of a broad conceptual framework, suitable for a multi-level account of intuition and for a fruitful dialogue with distant research areas. It critically discusses two mainstream conceptualizations of intuition which claim to be grounded in a cross-disciplinary consensus. Drawing on the complexity paradigm, it then proposes a conceptualization of intuition as emergence. Finally, it explores the theoretical and practical implications. (shrink)

Most philosophical decision theorists and philosophers of the social sciences believe that decision theory is and should be in the business of providing folk psychological explanations of choice behaviour, and that it can only do so if we understand the preferences, utilities and probabilities that feature in decision-theoretic models as ascriptions of mental states not reducible to choice. The behavioural interpretation of preference and related concepts, still common in economics, is consequently cast as misguided. This paper argues that even those (...) who strive to provide folk psychological explanations should side with the economists, and adopt a behavioural interpretation of the preferences featuring in decision-theoretic models. Under a mentalistic interpretation of preference, decision-theoretic models do not straightforwardly provide ordinary folk psychological explanations. Instead, they involve controversial enough commitments about the mental causes of choice to not only fail to adequately capture much unreflective decision-making, but also many intentional, reason-based and instrumentally rational choices. Satisfactory folk psychological explanation in fact only comes indirectly from inferring more fundamental conative attitudes from a pattern of decision-theoretic preferences. And the behavioural interpretation does a better job at facilitating such inferences. My argument extends to the related concepts of utility and probability. (shrink)

Inclusivity is widely considered a requirement of defensible environmental risk consultations and is often either mandated or recommended to help ensure attention to stakeholders’ diverse views. Experience suggests the opposite: the emphasis on an inclusive consultation process often makes it impossible for decision makers to listen carefully to stakeholders and for citizens’ views to influence the design and choice of proposed actions. This paper briefly reviews the promise of environmental risk consultations before outlining several of the more serious problems associated (...) with an emphasis on inclusivity: long lists of undifferentiated concerns, facts tainted by stakeholders’ perspectives and worldviews, little access to clarifying dialogue or tests of expertise, few opportunities to scrutinize knowledge quality, avoidance of controversial issues, and an overwhelming abundance of information. As a result, the promotion of inclusivity often serves as a convenient excuse for decision makers to silence citizens by substituting quantity for quality, breadth for depth, and an adversarial approach for dialogue and informed understanding. (shrink)

Some contemporary paternalists argue in favor of government interventions based on how experimental psychologists and behavioral economists have found that our behavior often diverges from what would be predicted by rational-choice models. In this article it is argued that these findings can, more specifically, be used to identify decisional trouble spots where paternalist interventions may be legitimate. It is further argued that since the epistemic legitimacy of government paternalism ultimately rests on centralized decision-making having a comparative advantage, it also depends (...) on the possibility of such interventions being governed by an ideal of evidence-based policy-making. The article asks how stringently this requirement should be understood, and to what extent government can legitimately engage in what might be called experimental policy-making of a paternalistic character. (shrink)

In this response, we clarify several misunderstandings of the understanding/acceptance principle and defend our specific operationalization of that principle. We reiterate the importance of addressing the problem of rational task construal and we elaborate the notion of computational limitations contained in our target article. Our concept of thinking dispositions as variable intentional-level styles of epistemic and behavioral regulation is explained, as is its relation to the rationality debate. Many of the suggestions of the commentators for elaborating two-process models are easily (...) integrated into our generic dual-process account. We further explicate how we view the relation between System 1 and System 2 and evolutionary and normative rationality. We clarify our attempt to fuse the contributions of the cognitive ecologists with the insights of the original heuristics and biases researchers. (shrink)

This paper discusses Stanovich's appeal to individual differences in reasoning and decision-making to undermine the “adaptive rationality” project put forth by Gigerenzer and his co-workers. I discuss two different arguments based on Stanovich's research. First, heterogeneity in the use of heuristics seems to be at odds with the adaptationist background of the project. Second, the existence of correlations between cognitive ability and susceptibility to cognitive bias suggests that the “standard picture of rationality” (Stein, 1996, 4) is normatively adequate. I argue (...) that, as matters stand, none of the arguments can be seen as fully compelling. Nevertheless, my discussion is not only critical of Stanovich's research, as I also show that (and how) his research can push forward the so-called “rationality debate” by encouraging greater theoretical and experimental work. (shrink)

Are risk preferences stable over time? To address this question we elicit risk preferences from the same pool of subjects at two different moments in time. To interpret the results, we use a Fechner stochastic choice model in which the revealed preference of individuals is governed by some underlying preference, together with a random error. We take cumulative prospect theory as the underlying preference model (Kahneman and Tversky, Econometrica 47:263–292, 1979; Tversky and Kahneman, Journal of Risk and Uncertainty 5:297–323, 1992). (...) We observe that the aggregate pattern of preferences is very similar in both sessions, and it matches the results reported in the literature. Most subjects are risk averse for gains, and risk seeking for losses. However, the subjects that jointly agree with the reflection effect of prospect theory are around 50%. The percentage of individuals that change their responses across sessions is quite high, 63%. Estimating the stochastic choice model we find that 72% of the subjects have an underlying preference which agrees with the reflection effect of prospect theory. The remaining 28% are mainly classified as risk averse for both gains and losses. The results reinforce the empirical validity of the reflection effect. Deviations from the reflection effect can be attributed to noise, as well as to the existence of a fraction of risk averse subjects. (shrink)

Behavioral economics and existentialism both present informative perspectives on human choice. We argue in this article that the dialogue between the two approaches can enrich the current debate about the normative implications of behavioral economics. While behavioral economics suggests that our capacity to choose is constrained by cognitive biases and environmental influences, existentialism emphasizes that we can treat ourselves as free and ‘becoming’ beings in spite of the many constraints we face. Acknowledging these two perspectives in the form of a (...) theoretical synthesis—which we propose to call existentialist behavioral economics—provides us with reasons why we should protect our choices ‘as our own’ and how doing so may be more difficult than we anticipate. It also provides a framework to analyze the threat of identity-shaping social and technological developments, such as preference-altering nudges and artificially intelligent prediction algorithms. (shrink)

Elaborating on the notions that humans possess different modalities of decision-making and that these are often influenced by moral considerations, we conducted an experimental investigation of the Trolley Problem. We presented the participants with two standard scenarios (‹lever’ and ‹stranger’) either in the usual or in reversed order. We observe that responses to the lever scenario, which result from (moral) reasoning, are affected by our manipulation; whereas responses to the stranger scenario, triggered by moral emotions, are unaffected. Furthermore, when asked (...) to express general moral opinions on the themes of the Trolley Problem, about half of the participants reveal some inconsistency with the responses they had previously given. (shrink)

The response mode bias, in which subjects exhibit different risk attitudes when assessing certainty equivalents versus indifference probabilities, is a well-known phenomenon in the assessment of utility functions. In this empirical study, we develop and apply a cardinal measure of risk attitudes to analyze not only the existence, but also the strength of this phenomenon. Since probability levels involved in decision problems are already known to have a strong impact on behavior, we use this approach to study the impact of (...) probabilities on the extent of the response mode bias. We find that the direction in which probabilities influence measured risk aversion is the opposite in the certainty equivalence (CE) method versus in the probability equivalence (PE) method. Utilizing the CE elicitation approach leads to an increase of risk seeking for gambles involving high probabilities. For the PE method, subjects tend to behave risk averse with gambles of high probabilities. This behavior is reversed in the gain domain. This “tailwhip” effect is consistently replicated in several experiments, involving both loss and gain domains of lotteries. (shrink)

This article makes six points, using evidence from the Iranian Revolution of 1979: (1) Causal mechanisms, indeed all explanations, imply certain inner states on the part of individuals. (2) The experience of revolution is dominated by confusion. (3) People involved in revolutions act largely in response to their best guesses about how others are going to act. (4) These guesses and responses can shift swiftly and dramatically, in ways that participants and observers cannot predict. (5) Explanation involves retroactive prediction: it (...) implies that if we had recognized causal factors A, B, or C at the time, we would have expected some ensuing development. (6) To the extent that revolutionary experience is characterized by confusion, then understanding this experience may disconfirm all explanation. Key Words: understanding • Verstehen • explanation • revolution. (shrink)

The cognitive critique of the goals and desires that are input into the implicit calculations that result in instrumental rationality is one aspect of what has been termed broad rationality (Elster, 1983). This cognitive critique involves, among other things, the search for rational integration (Nozick, 1993)—that is, consistency between first-order and second-order preferences. Forming a second-order preference involves metarepresentational abilities made possible by mental decoupling operations. However, these decoupling abilities are separable from the motive that initiates the cognitive critique itself. (...) I argue that Velleman (1992) has identified that motive (“the desire to act in accordance with reasons”), and that it might be operationalisable as a thinking disposition at a very superordinate cognitive level. This thinking disposition, the Master Rationality Motive, is likely to be of particular importance in explaining individual differences in the tendency to seek rational integration. Preliminary research on related constructs suggests that this construct is measurable. (shrink)