Individual differences in inaccurate versus accurate economic judgment and decision making. Metacognitive approach

Abstract

We investigate the existence of a universal psychological construct capable of predicting inaccuracies in economic judgment and decision-making. We propose that metacognitive-self (meaning self-awareness of biases) can serve as this general predictor. Our hypothesis posits that the high self-awareness of biases will reduce the probability of making an inaccurate judgment or decision in a cognitive bias task. Our study involved 293 participants who completed 14 cognitive bias tasks, each assessing a different bias. We used a novel multilevel methodology that enables the simultaneous examination of the effect of self-awareness on various biases, including fixed and random effect. Our findings indicate that while metacognitive self did not directly influence the accuracy of economic decisions (fixed effect), it did exhibit a significant random effect, suggesting a variation in the effect size depended on the specific cognitive bias task. We observed that high metacognitive-self improves accurate judgment and decision-making in certain bias task (type of bias) but reduces normative choice in others. We found that the effect of individual differences emerged as robust. We conclude that the presence of biased judgments and decisions is likely driven by an array of psychological mechanisms, diverging across different problems and contexts.