Pragmatic approach to decision making under uncertainty: The case of the disjunction effect

Abstract

The disjunction effect (Tversky & Shafir, 1992) occurs when decision makers prefer option x (versus y) when knowing that event A occurs and also when knowing that event A does not occur, but they refuse x (or prefer y) when not knowing whether or not A occurs. This form of incoherence violates Savage's (1954) sure-thing principle, one of the basic axioms of the rational theory of decision making. The phenomenon was attributed to a lack of clear reasons for accepting an option (x) when subjects are under uncertainty. Through a pragmatic analysis of the task and a consequent reformulation of it, we show that the effect does not depend on the presence of uncertainty, but on the introduction of non-relevant goals into the text problem, in both the well-known Gamble problem and the Hawaii problem.