Abstract
Rational explanation is ubiquitous in psychology and social sciences, ranging from rational analysis, expectancy-value theories, ideal observer models, mental logic to probabilistic frameworks, rational choice theory, and informal “folk psychological” explanation. However, rational explanation appears to be challenged by apparently systematic irrationality observed in psychological experiments, especially in the field of judgement and decision-making (JDM). Here, it is proposed that the experimental results require not that rational explanation should be rejected, but that rational explanation is local, i.e., within a context. Thus, rational models need to be supplemented with a theory of contextual shifts. We review evidence in JDM that patterns of choices are often consistent within contexts, but unstable between contexts. We also demonstrate that for a limited, though reasonably broad, class of decision-making domains, recent theoretical models can be viewed as providing theories of contextual shifts. It is argued that one particular significant source of global inconsistency arises from a cognitive inability to represent absolute magnitudes, whether for perceptual variables, utilities, payoffs, or probabilities. This overall argument provides a fresh perspective on the scope and limits of human rationality.
Highlights
A paradox appears to lie at the hearts of psychological explanation
This paper focuses on a “third way”: namely that rational explanation is of central importance to understanding the mind and cannot be discarded, but that such explanation is local to a specific context
The aim of this article is to show how the standard focus in rational choice theory on consistency can be derived out of knowledge of basic cognitive mechanisms underlying decision-making, instead of being assumed out of convenience, intuition, and theoretical helplessness. This aspect of cognition is related to how people make inferences that lead to judgments of the magnitudes of choice options, or their attributes, such as values, payoffs, and probabilities, which are essential ingredients of every decision problem
Summary
A paradox appears to lie at the hearts of psychological explanation. The explanation of thought and behaviour in rational terms is central to psychological theorising across a vast range of psychological domains and theories, ranging from the rational analysis of memory, categorisation or reasoning [1,2] expectancy-value theories of attitude formation [3], ideal observer models in perception [4] mental logic [5] to probabilistic frameworks [6] among many others. The framework described here derives some universal implications for most descriptive models of choice, across domains and disciplines in behavioural sciences, which boils down to the core principle that decisions are relative, in a specific way, to what is embedded in the local context. A plausible account is summarised by the claim that because people lack computational and time resources to integrate all relevant information from memory or the world, they have poor notions of absolute cooperativeness, risk, or utility, and, instead, humans can only make judgments and decisions in relative terms—analogously to the presented psychophysical and cognitive theories of perception and judgment of information about magnitudes representing intensities of stimulus attributes (see [89] for a review of the evidence)
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