The Wiley Blackwell Handbook of Judgment and Decision Making E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Geisteswissenschaft
• Sprache: Englisch

Seitenzahl: 2597

Veröffentlichungsjahr: 2015

Beschreibung

• A comprehensive, up-to-date examination of the most important theory, concepts, methodological approaches, and applications in the burgeoning field of judgment and decision making (JDM)
• Emphasizes the growth of JDM applications with chapters devoted to medical decision making, decision making and the law, consumer behavior, and more
• Addresses controversial topics from multiple perspectives – such as choice from description versus choice from experience – and contrasts between empirical methodologies employed in behavioral economics and psychology
• Brings together a multi-disciplinary group of contributors from across the social sciences, including psychology, economics, marketing, finance, public policy, sociology, and philosophy

2 Volumes

Leseprobe

Volume 1

The Wiley Blackwell Handbook of Judgment and Decision Making

Volume I

Edited by

Gideon Keren and George Wu

This edition first published 2015© 2015 John Wiley & Sons, Ltd

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Library of Congress Cataloging-in-Publication Data

The Wiley Blackwell handbook of judgment and decision making / edited by Gideon Keren, George Wu.  volumes cm Includes bibliographical references and index.

 ISBN 978-1-118-46839-5 (hardback)1. Decision making. 2. Judgment. I. Keren, Gideon. II. Wu, George. BF448.W55 2015 153.4′6–dc23

    2015002776

A catalogue record for this book is available from the British Library.

Contributors

Sooyun Baik Organisational Behaviour Area, London Business School, UK

Emily Balcetis Department of Psychology, New York University, USA

Daniel M. Bartels University of Chicago, Booth School of Business, USA

Christopher W. Bauman University of California-Irvine, Paul Merage School of Business, USA

Lehman Benson III Department of Management and Organizations, University of Arizona, USA

Colin F. Camerer Division of the Humanities and Social Sciences, Caltech, USA

Jaee Cho Graduate School of Business, Columbia University, USA

Fiery A. Cushman Harvard University, Department of Psychology, USA

Marieke de Vries Tilburg University, the Netherlands

Carsten Erner Anderson School of Management, University of California–Los Angeles, USA

Daniel C. Feiler Tuck School of Business, Dartmouth College, USA

Klaus Fiedler Department of Psychology, University of Heidelberg, Germany

Craig R. Fox Anderson School of Management, University of California–Los Angeles, USA

Erin Frey Harvard Business School, USA

Kentaro Fujita Department of Psychology, The Ohio State University, USA

Yael Granot Department of Psychology, New York University, USA

Uriel Haran Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, Israel

Reid Hastie University of Chicago Booth Graduate School of Business, USA

Ralph Hertwig Center for Adaptive Rationality (ARC), Max Planck Institute for Human Development, Germany

Robin M. Hogarth Department of Economics and Business, Universitat Pompeu Fabra, Spain

Candice H. Huynh College of Business Administration, California State Polytechnic University, Pomona, USA

L. Robin Keller Paul Merage School of Business, University of California–Irvine, USA

Gideon Keren Department of Psychology, Tilburg University, the Netherlands

Katharina Kluwe Department of Psychology, Loyola University Chicago, USA

Jonathan J. Koehler Northwestern University School of Law, USA

Asher Koriat Department of Psychology, University of Haifa, Israel

Laura J. Kray Haas School of Business, University of California–Berkeley, USA

Florian Kutzner Warwick Business School, University of Warwick, UK

Richard P. Larrick Fuqua School of Business, Duke University, USA

Nira Liberman Department of Psychology, Tel-Aviv University, Israel

Graham Loomes Warwick Business School, University of Warwick, UK

Mary Frances Luce Fuqua School of Business, Duke University, USA

A. Peter McGraw University of Colorado Boulder, Leeds School of Business, USA

John Meixner Northwestern University School of Law, USA

Katherine L. Milkman The Wharton School, University of Pennsylvania, USA

Don A. Moore Haas School of Business, University of California–Berkeley, USA

Carey K. Morewedge Questrom School of Business, Boston University, USA

Michael W. Morris Graduate School of Business, Columbia University, USA

Lisa D. Ordóñez Department of Management and Organizations, University of Arizona, USA

Jillian O’Rourke Stuart Department of Psychology, University of Iowa, USA

John W. Payne Fuqua School of Business, Duke University, USA

Andrea Pittarello Department of Psychology, Ben-Gurion University of the Negev, Israel

David A. Pizarro Cornell University, Department of Psychology, USA

Timothy J. Pleskac Center for Adaptive Rationality, Max Planck Institute for Human Development, Germany

Devin G. Pope University of Chicago, Booth School of Business, USA

Todd Rogers Harvard Kennedy School, USA

Alan G. Sanfey Donders Institute for Brain, Cognition and Behaviour, Radboud University, the Netherlands

Krishna Savani Division of Strategy, Management, and Organisation, Nanyang Business School, Singapore

Laura Scherer Psychological Sciences, University of Missouri, USA

Jay Simon Defense Resources Management Institute, Naval Postgraduate School, USA

Jack B. Soll Fuqua School of Business, Duke University, USA

Mirre Stallen Donders Institute for Brain, Cognition and Behaviour, Radboud University, the Netherlands

Anne M. Stiggelbout Leiden University Medical Center, the Netherlands

Justin R. Sydnor School of Business, University of Wisconsin, USA

Karl Halvor Teigen Department of Psychology, University of Oslo, Norway

Elizabeth R. Tenney David Eccles School of Business, University of Utah, USA

R. Scott Tindale Department of Psychology, Loyola University Chicago, USA

Stefan T. Trautmann Alfred-Weber-Institute for Economics, Heidelberg University, Germany

Yaacov Trope Department of Psychology, New York University, USA

Oleg Urminsky University of Chicago, Booth School of Business, USA

Gijs van de Kuilen Tilburg University, the Netherlands

Alex B. Van Zant Haas School of Business, University of California–Berkeley, USA

Daniel J. Walters Anderson School of Management, University of California–Los Angeles, USA

Douglas H. Wedell Department of Psychology, University of South Carolina, USA

Paul D. Windschitl Department of Psychology, University of Iowa, USA

George Wu University of Chicago, Booth School of Business, USA

Gal Zauberman Yale University, Yale School of Management, USA

Jiao Zhang Lundquist College of Business, University of Oregon, USA

1A Bird’s-Eye View of the History of Judgment and Decision Making

Gideon Keren

Department of Psychology, Tilburg University, the Netherlands

George Wu

University of Chicago, Booth School of Business, USA

Any historical account has a subjective element in it and is thus vulnerable to the benefit of hindsight (Fischhoff, 1975; Roese & Vohs, 2012). This historical review of 60 years of judgment and decision making (JDM) research is of course no exception. Our attempt to sketch the major developments of the field since its inception is further colored by the interests and knowledge of the two authors and thus surely reflects any number of egocentric biases (Dunning & Hayes, 1996; Ross, Greene, & House, 1977). Notwithstanding, we feel that there is a high level of agreement among JDM researchers as to the main developments that have shaped the field. This chapter is an attempt to document this consensus and trace the impact of these developments on the field.

The present handbook is the successor to the Blackwell Handbook of Judgment and Decision Making that appeared in 2004. That handbook, edited by Derek Koehler and Nigel Harvey, was the first handbook of judgment and decision making. Our overview of the field is prompted by the following plausible counterfactual: What if one or more JDM handbooks had appeared prior to 2004?1 Handbooks might (and should) alter the course of a field by making useful content accessible, providing organizing frameworks, and posing important questions (Farr, 1991). Although we recognize these important roles, our chapter is motivated by one other function of a handbook: a handbook’s editors serve as curators of that field’s ideas and thus identify which research streams are important and energetic (and presumably most worth pursuing) and which ones are not. This chapter thus provides an overview of the field by considering what we would include in two hypothetical JDM handbooks, one published in 1974 and one published in 1988. We attempt to identify which topics were viewed as the major questions and main developments at the time of those handbooks. In so doing, we reveal how the field has evolved, identifying research areas that have more or less always been central to the field as well as those that have declined in importance. For the latter topics, we speculate about reasons for their decreased prominence.

Our chapter’s organization complements more traditional historical accounts of the field. Many reviews of this sort have appeared over the years in Annual Review of Psychology (e.g., Becker & McClintock, 1967; Edwards, 1961; Einhorn & Hogarth, 1981; Gigerenzer & Gaissmaier, 2011; Hastie, 2001; Lerner, Li, Valdesolo, & Kassam, 2015; Lopes, 1994; Mellers Schwartz, & Cooke, 1998; Oppenheimer & Kelso, 2015; Payne, Bettman, & Johnson, 1992; Pitz & Sachs, 1984; Rapoport & Wallsten, 1972; Shafir & LeBoeuf, 2002; Slovic, Fischhoff, & Lichtenstein, 1977; E. U. Weber & Johnson, 2009). In addition, excellent reviews appear as chapters in various non-JDM handbooks (Abelson & Levi, 1985; Ajzen, 1996; Dawes, 1998; Fischhoff, 1988; Gilovich & Griffin, 2010; Markman & Medin, 2002; Payne, Bettman, & Luce, 1998; Russo & Carlson, 2002; Slovic, Lichtenstein, & Fischhoff, 1988; Stevenson, Busemeyer, & Naylor, 1990); in W. M. Goldstein and Hogarth’s (1997) excellent historical introduction to their collection of research papers; and in textbooks, such as Bazerman and Moore (2012), Hastie and Dawes (2010), Hogarth (1987), Plous (1993), von Winterfeldt and Edwards (1986, pp. 560–574), and Yates (1990).

We have divided 60 years of JDM research into four Handbook periods: 1954–1972, 1972–1986, 1986–2002, and 2002–2014. The first period (1954–1972) marks the initiation of several systematic research lines of JDM, many of which are still central to this day. Most notably, Edwards introduced microeconomic theory to psychologists and thus set up a dichotomy between the normative and descriptive perspectives on decision making. This dichotomy remains at the heart of much of JDM research. The second period (1972–1986) is characterized by several new developments, the most significant ones being the launching of the heuristics and biases research program (Kahneman, Slovic, & Tversky 1982) and the introduction of prospect theory (Kahneman & Tversky, 1979). In the third period (1986–2002), we see the infusion of influences such as emotion, motivation, and culture from other areas of psychology into JDM research, as well as the rapid spread of JDM ideas into areas such as economics, marketing, and social psychology. This period was covered by Koehler and Harvey’s (2004) handbook. In the last period (2002–2014), JDM has continued to develop as a multidisciplinary field in ways that are at least partially reflected by the increased application of JDM research to domains such as business, medicine, law, and public policy.

The present introductory chapter is organized as follows. We first discuss some important early milestones in the field. This discussion attempts to identify the underlying scholarly threads that broadly define the field and thus situates the selection of topics for our four periods. In the next two sections, we outline the contents of two editions of the hypothetical “Handbook of Judgment and Decision Making” one published roughly in 1974 (to cover 1954–1972) and one published roughly in 1988 (to cover 1972–1986).2 As noted, the period from 1986–2002 is covered in Koehler and Harvey’s 2004 handbook and the last period is roughly covered in the present two volumes. We also discuss these two periods and comment on how the contents of these two handbooks reflect the field in 2004 and 2015, respectively. In the final section, we conclude with some broader thoughts about how the field has changed over the last 60 years. Speculations about what future directions the field might take are briefly presented in the final chapter.

Some Early Historical Milestones

Several points in time could be considered as marking the inception of judgment and decision making. One possible starting point may be Pascal’s wager: the French philosopher Blaise Pascal’s formulation of the decision problem in which humans bet on whether to believe in God’s existence (Pascal, 1670). This proposal can be thought of as the first attempt to perform an expected utility (hereafter, throughout the handbook, EU) analysis on an existential problem and to employ probabilistic reasoning in an uncertain context. Two other natural candidates are Bernoulli’s (1738/1954) famous paper “Exposition of a New Theory of Measurement of Risk,” which introduced the notion of diminishing marginal utility, and Bentham’s (1879) book An Introduction to the Principles of Morals and Legislation, which proposed some dimensions of pleasure and pain, two major sources of utility (see Stigler, 1950). Because neither of these works had much explicit psychological discussion (but see Kahneman, Wakker, & Sarin, 1997 which discusses some of Bentham’s psychological insights), a more natural starting point is the publication of Ward Edwards’s (1954) seminal article “The Theory of Decision Making,” in Psychological Bulletin, which can be viewed as an introduction to microeconomic theory written for psychologists. The topics of that influential paper included riskless choice (i.e., consumer theory), risky choice, subjective probability, and the theory of games, with the discussion of these topics interspersed with a series of psychological comments. The article’s most essential exhortation is encapsulated in the paper’s final sentence: “all these topics represent a new and rich field for psychologists, in which a theoretical structure has already been elaborately worked out and in which many experiments need to be performed” (p. 411). Edwards followed up this article in 1961 with the publication of “Behavioral Decision Theory” in the Annual Review of Psychology. That paper should be seen as a successor to the 1954 article as well as evidence for the earlier paper’s enormous influence: “This review covers the same subject matter for the period 1954 through April, 1960” (p. 473). The tremendous volume of empirical and theoretical research on decision making in those six years speaks to the remarkable growth of the emerging field of judgment and decision making.

Two other important publications also marked the introduction of JDM: Savage’s (1954) The Foundations of Statistics and Luce and Raiffa’s (1957) Games and Decisions. These two books cover the three major theories that dominated the field at its inception: utility theory, probability theory, and game theory. A major query regarding each of the three theories concerned the extent to which they had a normative (what should people do) or a descriptive (what do people actually do) orientation. All three theories were originally conceived as normative in that they contained recommendations for the best possible decisions, a view that reflected a tacit endorsement that human decision making is undertaken by homo economicus, an individual who strictly follows the rational rules dictated by logic and mathematics (Mill, 1836).3 Deviations were thought to be incidental (i.e., errors of performance) rather than systematic (e.g., errors of comprehension).

Edwards (1954) made clear that actual behavior might depart from the normative standard and inspired a generation of scholars to question the descriptive validity of these theories. Indeed, one of the hallmarks of the newborn discipline of judgment and decision making was the conceptual and empirical interplay between the normative and the descriptive facets of various judgment and decision making theories. This interplay played an essential role in the development of the field and remains central to the field to this day.

Both probability and utility theory (and to some extent game theory; see, e.g., Nash, 1950) are founded on axiomatic systems. An axiomatic system is a set of conditions (i.e., axioms) that are necessary and sufficient for a particular theory. As such, they are useful for normative purposes (individuals can reflect on whether an axiom is a reasonable principle; see Raiffa, 1968; Slovic & Tversky, 1974) as well as descriptive purposes (an axiom often provides a clear recipe for testing a theory; see the discussion of the Allais Paradox later in this chapter). Luce and Raiffa (1957) identified some gaps between the normative and descriptive facets of EU theory. For each of von Neumann and Morgenstern’s (1947) axioms, they provided some critical comments questioning the validity of that axiom and examining its behavioral applicability to real-life situations. For instance, the discussion of the “reduction of compound lotteries” axiom foreshadowed later experimental research that established systematic violations of that axiom (Bar-Hillel, 1973; Ronen, 1971). Similarly, doubts about the transitivity axiom anticipated research that demonstrated that preferences can cycle (e.g., Tversky, 1969). These reservations were small in force relative to the more fundamental critique levied by Maurice Allais’ famous counterexample to the descriptive validity of EU theory (Allais, 1953). The Allais Paradox, along with the Ellsberg (1961) Paradox, continues to spawn research in the JDM literature (see Chapters 2 and 3 of the present handbook).

Somewhat later, a stream of research with a similar spirit explored whether subjective probability assessments differed from the probabilities dictated by the axioms of probability theory. The research in the early 1960s, much of it conducted by Edwards and his colleagues, was devoted to probability judgments and their assessments. Edwards, Lindman, and Savage (1963) introduced the field of psychology to Bayesian reasoning, and indeed a great deal of that research examined whether humans were Bayesian in assessing probabilities. A number of early papers suggested that the answer was generally no (Peterson & Miller, 1965; Phillips & Edwards, 1966; Phillips, Hays, & Edwards, 1966). Descendants of this work are still at the center of JDM (see Chapter 6 in this handbook).

The study of discrepancies between formal normative models and actual human behavior marked the beginning of the field and has served as a tempting target for empirical work. Indeed, according to Phillips and von Winterfeldt (2007), 139 papers testing the empirical validity of EU theory appeared between 1954 and 1961. Although the contrast between normative and descriptive remains a major theme underlying JDM research today, most JDM researchers strive to go beyond documenting a discrepancy to providing a psychological explanation for that phenomenon. Simon (1956) provided one early and influential set of ideas that have shaped the field’s theorizing about psychological mechanisms. He proposed that humans satisfice or adapt to their environment by seeking a satisfactory rather than optimal decision. This adaptive notion anticipated several research programs, including Kahneman and Tversky’s influential heuristics and biases program (Kahneman & Tversky, 1974).

It is also worth noting that the field was an interdisciplinary one from the beginning. Edwards had a visible role in this development by bringing economic theory and models to psychology, a favor that psychologists would return years later in the development of the field of behavioral economics. The interdisciplinary nature of the field was also reflected in monographs such as Decision Making: An Experimental Approach (1957), a collaboration between the philosopher Donald Davidson, the philosopher and mathematician Patrick Suppes, and the psychologist Sidney Siegel. The clear ubiquity and importance of decision making also meant that the application of JDM ideas included fields ranging from business and law to medicine and meteorology.

We next turn to the contents of our four handbooks, two hypothetical and two actual. Although these handbooks illustrate the growth and development of the field over the last 60 years, we also see throughout the interplay between the normative standard and descriptive reality, as well as the interdisciplinary nature of the field.

The Initial Period, 1954–1972 (Handbook of Judgment and Decision Making, 1974)

The period from 1954 to 1972 can be viewed as the one in which the discipline of behavioral decision making went through its initial development. As we will see, many of the questions posed during that period continue to shape research today. By 1972, the field had an identity, with many scholars describing themselves as judgment and decision making researchers. In 1969, a “Research Conference on Subjective Probability and Related Fields” took place in Hamburg, Germany. In 1971, that conference, in its third iteration, had changed its name to the “Research Conference on Subjective Probability, Utility, and Decision Making” (or SPUDM for short), hence broadening the scope of that organization and reflecting in some respects the maturation of the field. SPUDM has taken place every second year since that date (see Vlek, 1999, for a history of SPUDM).4

Suppose, in retrospect, that we were transported back in time to 1972 or so and tasked with preparing a handbook of judgment and decision making. How would such a volume be structured and how does the current volume differ from such a hypothetical volume? Figure 1.1 contains a list of contents of such a volume, retrospectively assembled by the two of us. In preparing this list, we have assumed the role of hypothetical curators, with the caveat that other researchers would likely have constructed a different list.5

Figure 1.1 Contents of a hypothetical JDM handbook for the period 1954–1972.

As the previous section indicated, three major themes have attracted the attention of JDM researchers since the inception of the field and continue to serve as the backbones of the field to varying extents even today: uncertainty and probability theory; decision under risk and utility theory; and strategic decision making and game theory. Accordingly, three sections in Figure 1.1 correspond to these three major pillars of the field.

Our first hypothetical volume contains an introductory chapter (Chapter 1, 1974) that presents an overview of the normative versus descriptive distinction, a distinction that had been central to the field since its inception. (We denote the chapters with the publication date of that hypothetical or actual handbook because we at times will refer to earlier or later handbooks; references to the hypothetical works are given in bold.) The Handbook then consists of four parts:

Uncertainty;

Choice behavior;

Game theory and its applications;

Other topics.

Hundreds of volumes have been written on the topic of uncertainty. For physicists and philosophers, the major question is whether uncertainty is inherent in nature. The development of the normative treatment of uncertainty as in modern probability theory is described in Hacking’s (1975) stimulating book. Researchers in JDM, however, assume that uncertainty is a reflection of the human mind and hence subjective. Accordingly, the second part of our imaginary volume is devoted to the assessment of uncertainty.

Chapter 2 (1974) serves as an introduction to this part and contrasts objective or frequentist notions of probability with subjective or personalistic probabilities. In a series of studies, John Cohen and his colleagues (J. Cohen, 1964, 1972; J. Cohen & Hansel, 1956) studied the relationship between subjective probability and gambling behavior. They found violations of the basic principles of probability such as evidence of the gambler’s fallacy. Indeed, Cohen’s work anticipated Kahneman and Tversky’s heuristics and biases research program (see Chapter 3, 1988).

Bayesian reasoning, a major research program initiated by Edwards (1962) (see also Edwards, Lindman, & Savage, 1963) is the topic of  Chapter 3 (1974). This program was motivated by understanding whether people’s estimates and intuitions are compatible with the Bayesian model, as well as whether the Bayesian model can serve as a satisfactory descriptive model for human probabilistic reasoning (Edwards, 1968). Using what has become known as the “bookbag and poker chip” paradigm, Edwards and his colleagues (e.g., Peterson, Schneider, & Miller, 1965; Phillips & Edwards, 1966) ran dozens of studies on how humans revise their opinions in light of new information. This research inspired Peterson and Beach (1967) to describe “man as an intuitive statistician” and argue that by and large “statistics can be used as the basis for psychological models that integrate and account for human performance in a wide range of inferential tasks” (p. 29). However, Edwards (1968) also pointed out that subjects were “conservative” in their updating: “opinion change is very orderly … but it is insufficient in amount … [and] takes anywhere from two to five observations to do one observation’s worth of work” (p. 18). The notion of “man as an intuitive statistician” was soon taken on by Kahneman and Tversky’s work on “heuristics and biases,” and the tendency toward conservatism was later challenged by Griffin and Tversky (1992) (see also Massey & Wu, 2005).

Chapter 4 (1974) covers the distinction between clinical and statistical modes of probabilistic reasoning. In this terminology, “clinical” refers to case studies that are used to generate subjective estimates, while “statistical” reflects some actuarial analytical model. In a seminal book, which influences the field to this day, Meehl (1954; see also Dawes, Faust, & Meehl, 1989) found that clinical predictions were typically much less accurate than actuarial or statistical predictions. As noted by Einhorn (1986), the statistical models were more advantageous because they “accepted error to make less error.” Dawes, Faust, and Meehl (1993) reviewed 10 diverse areas of application that demonstrated the superiority of the statistical models relative to human judgment.

Chapter 5 (1974)