Chapter 18 - Judgment and Decision-Making

Abstract

The cognitive processes of judgment and decision-making (JDM), which are fundamental to all human behavior, have been studied extensively in laboratory experiments. Much JDM research has examined the ways in which people choose among predefined alternatives, but little research has been done on the generation of new alternatives. Studies of uncertain outcomes have identified a number of deficiencies, both in the ways that people interpret the probabilities that are communicated to them and also in the ways that they generate probabilities as expressions of their own uncertainty about outcomes. Similarly, experiments have shown that the value people attach to different outcomes is subject to framing effects that produce different evaluations of mathematically equivalent alternatives. Finally, research on information search reveals that people can vary in the degree to which they are motivated by accuracy versus attitude consistency and, thus, their inclination to seek information that is likely to confirm or disconfirm their existing beliefs. Many judgment deficiencies have been attributed to judgment heuristics, which are simple “rules of thumb” that some researchers believe are used to simplify the cognitive processing of complex JDM tasks. However, other researchers have challenged many of the assumptions made about heuristics and the biases they can produce. There has been increasing interest in examining the ways in which JDM processes are influenced by task constraints such as uncertainty, complexity, urgency, and delay, as well as the fundamental cognitive processes of attention, long-term memory, and working memory. Differences between people responding to the same JDM problem and a given person responding to different JDM problems have led some researchers to propose dual-system models that contrast a slow rational system with a rapid intuitive system. A related issue is the relative influence of systematic rational processes and immediate emotional reactions on JDM processes. One important question about JDM research is whether the many deficiencies that have been identified by researchers have real significance for real-life decisions or are merely laboratory artifacts arising from artificial conditions. This question underscores the importance of conducting field experiments with decision-makers who vary in their experience with different types of JDM problems. Currently, however, researchers lack a comprehensive taxonomy of situations, tasks, and person characteristics that can be used to systematically examine the generalizability of different JDM processes. In addition, JDM researchers need to establish stronger theoretical connections to closely related areas such as social cognition, attitudes and behavior, and especially fundamental cognitive processes of attention and memory