MAPS OF BOUNDED RATIONALITY: A PERSPECTIVE ON INTUITIVE JUDGMENT AND CHOICE

The work cited by the Nobel committee was done jointly with the late Amos Tversky (1937‐1996) during a long and unusually close collaboration. Together, we explored the psychology of intuitive beliefs and choices and examined their bounded rationality. This essay presents a current perspective on the three major topics of our joint work: heuristics of judgment, risky choice, and framing effects. In all three domains we studied intuitions ‐ thoughts and preferences that come to mind quickly and without much reflection. I review the older research and some recent developments in light of two ideas that have become central to social-cognitive psychology in the intervening decades: the notion that thoughts differ in a dimension of accessibility ‐ some come to mind much more easily than others ‐ and the distinction between intuitive and deliberate thought processes. Section 1 distinguishes two generic modes of cognitive function: an intuitive mode in which judgments and decisions are made automatically and rapidly, and a controlled mode, which is deliberate and slower. Section 2 describes the factors that determine the relative accessibility of different judgments and responses. Section 3 explains framing effects in terms of differential salience and accessibility. Section 4 relates prospect theory to the general * This essay revisits problems that Amos Tversky and I studied together many years ago, and continued to discuss in a conversation that spanned several decades. The article is based on the Nobel lecture, which my daughter Lenore Shoham helped put together. It builds on an analysis of judgment heuristics that was developed in collaboration with Shane Frederick (Kahneman and Frederick, 2002). Shane Frederick, David Krantz, and Daniel Reisberg went well beyond the call of friendly duty in helping with this effort. Craig Fox, Peter McGraw, Daniel Read, David Schkade and Richard Thaler offered many insightful comments and suggestions. Kurt Schoppe provided valuable assistance, and Geoffrey Goodwin and Amir Goren helped with scholarly factchecking. My research is supported by NSF 285-6086 and by the Woodrow Wilson School for Public and International Affairs at Princeton University. A different version of this article is to ap

[1]  Gary Klein,et al.  Sources of Power: How People Make Decisions , 2017 .

[2]  F. Agnoli.  Development of judgmental heuristics and logical reasoning: Training counteracts the representativeness heuristic , 1991 .

[3]  S. Epstein.  Integration of the cognitive and the psychodynamic unconscious. , 1994, The American psychologist.

[4]  N. Anderson.  Contributions To Information Integration Theory: Volume 1: Cognition , 1991 .

[5]  N. Anderson.  Foundations of information integration theory , 1981 .

[6]  A. Tversky,et al.  On the study of statistical intuitions , 1982, Cognition.

[7]  A. Tversky,et al.  Subjective Probability: A Judgment of Representativeness , 1972 .

[8]  E. Poulton.  Range Effects in Experiments on People , 1975 .

[9]  Norbert Schwarz,et al.  Priming and communication: Social determinants of information use in judgments of life satisfaction , 1988 .

[10]  Derek J. Koehler,et al.  A Strength Model of Probability Judgments for Tournaments , 1996 .

[11]  Franca Agnoli,et al.  Suppressing natural heuristics by formal instruction: The case of the conjunction fallacy , 1989, Cognitive Psychology.

[12]  L. Cosmides,et al.  Are humans good intuitive statisticians after all? Rethinking some conclusions from the literature on judgment under uncertainty , 1996, Cognition.

[13]  M. Posner,et al.  Retention of Abstract Ideas. , 1970 .

[14]  D. Kahneman,et al.  When More Pain Is Preferred to Less: Adding a Better End , 1993 .

[15]  A. Tversky,et al.  Evidential impact of base rates , 1981 .

[16]  S. Sloman.  Two systems of reasoning. , 2002 .

[17]  D. Ariely,et al.  When does duration matter in judgment and decision making? , 2000, Journal of experimental psychology. General.

[18]  Timothy D. Wilson,et al.  Mental contamination and the debiasing problem. , 2002 .

[19]  R. C. Oldfield.  THE PERCEPTION OF CAUSALITY , 1963 .

[20]  D. Kahneman,et al.  Propensities and counterfactuals: The loser that almost won , 1990 .

[21]  A. Tversky,et al.  Prospect theory: analysis of decision under risk , 1979 .

[22]  D Kahneman,et al.  Determinants of the remembered utility of aversive sounds. , 2000, Journal of experimental psychology. General.

[23]  Christopher K. Hsee.  Less is Better: When Low-Value Options are Valued More Highly than High-Value Options , 1998 .

[24]  A. Tversky,et al.  Prospect Theory : An Analysis of Decision under Risk Author ( s ) : , 2007 .

[25]  Norbert Schwarz,et al.  Assimilation and Contrast Effects in Part-Whole Question Sequences: A Conversational Logic Analysis , 1991 .

[26]  A. Tversky,et al.  On the elicitation of preferences for alternative therapies. , 1982, The New England journal of medicine.

[27]  D. Kahneman,et al.  Representativeness revisited: Attribute substitution in intuitive judgment. , 2002 .

[28]  Daniel Kahneman,et al.  Availability: A heuristic for judging frequency and probability , 1973 .

[29]  A. Tversky,et al.  Choices, Values, and Frames , 2000 .

[30]  Nathan Novemsky,et al.  How are base-rates used, when they are used: a comparison of additive and Bayesian models of base-rate use , 1999 .

[31]  D. Ariely.  Seeing Sets: Representation by Statistical Properties , 2001, Psychological science.

[32]  K. Stanovich,et al.  Heuristics and Biases: Individual Differences in Reasoning: Implications for the Rationality Debate? , 2002 .

[33]  A. Treisman,et al.  Representation of statistical properties , 2003, Vision Research.

[34]  Kevin J. Boyle,et al.  Measuring Natural Resource Damages with Contingent Valuation: Tests of Validity and Reliability , 1993 .

[35]  Daniel T. Gilbert,et al.  Thinking lightly about others: Automatic components of the social inference process. , 1989 .

[36]  Ilana Ritov,et al.  Determinants of stated willingness to pay for public goods: A study in the headline method , 1994, Journal of risk and uncertainty.

[37]  Derek J. Koehler,et al.  Heuristics and Biases: Remarks on Support Theory: Recent Advances and Future Directions , 2002 .

[38]  D. Kahneman.  A perspective on judgment and choice: mapping bounded rationality. , 2003, The American psychologist.

[39]  L. Jacoby.  A process dissociation framework: Separating automatic from intentional uses of memory , 1991 .

[40]  A. Tversky,et al.  The weighing of evidence and the determinants of confidence , 1992, Cognitive Psychology.

[41]  M. Posner,et al.  On the genesis of abstract ideas. , 1968, Journal of experimental psychology.

[42]  D. Kahneman.  Maps of Bounded Rationality: Psychology for Behavioral Economics , 2003 .

[43]  D. Kahneman,et al.  Back to Bentham? Explorations of experience utility , 1997 .

[44]  Herbert A Simon,et al.  The understanding process: Problem isomorphs , 1976, Cognitive Psychology.

[45]  John Tooby,et al.  Are humans good intuitive statisticians after all , 1996 .

[46]  Irwin P. Levin,et al.  Need for Cognition and Choice Framing Effects , 1996 .

[47]  S. Chaiken,et al.  Dual-process theories in social psychology , 1999 .

[48]  E. Higgins.  Knowledge activation: Accessibility, applicability, and salience. , 1996 .

[49]  A. Tversky,et al.  On the psychology of prediction , 1973 .

[50]  D. Kahneman,et al.  Duration neglect in retrospective evaluations of affective episodes. , 1993, Journal of personality and social psychology.

[51]  A. Tversky,et al.  Loss Aversion in Riskless Choice: A Reference-Dependent Model , 1991 .

[52]  K. Arrow.  Risk Perception in Psychology and Economics , 1982 .

[53]  A. Tversky,et al.  BELIEF IN THE LAW OF SMALL NUMBERS , 1971, Pediatrics.

[54]  J. Cacioppo,et al.  Rudimentary determinants of attitudes. II: Arm flexion and extension have differential effects on attitudes. , 1993, Journal of personality and social psychology.

[55]  N. Schwarz,et al.  The availability heuristic revisited: Ease of recall and content of recall as distinct sources of information. , 2002 .

[56]  A. Tversky,et al.  Rational choice and the framing of decisions , 1990 .

[57]  D. Kahneman.  A psychological point of view: Violations of rational rules as a diagnostic of mental processes , 2000, Behavioral and Brain Sciences.

[58]  E. Rosch,et al.  Family resemblances: Studies in the internal structure of categories , 1975, Cognitive Psychology.

[59]  R. Luce.  Representation, axiomatization, and invariance , 2006 .

[60]  David Laibson,et al.  Experienced Utility and Objective Happiness: A Moment-Based Approach , 2001 .

[61]  Raymond J. Kopp,et al.  Why Existence Value should be used in Cost‐Benefit Analysis , 1992 .

[62]  Fritz Heider,et al.  Social perception and phenomenal causality. , 1944 .

[63]  Dale T. Miller,et al.  Norm theory: Comparing reality to its alternatives , 1986 .

[64]  G. Clore,et al.  Mood, misattribution, and judgments of well-being: Informative and directive functions of affective states. , 1983 .

[65]  G. Gigerenzer.  How to Make Cognitive Illusions Disappear: Beyond “Heuristics and Biases” , 1991 .

[66]  L. Jacoby,et al.  On the relationship between autobiographical memory and perceptual learning. , 1981, Journal of experimental psychology. General.

[67]  A. Tversky,et al.  Advances in prospect theory: Cumulative representation of uncertainty , 1992 .

[68]  N. Anderson.  A Functional Theory of Cognition , 1996 .

[69]  D. Ariely.  Combining experiences over time: the effects of duration, intensity changes and on‐line measurements on retrospective pain evaluations , 1998 .

[70]  Christopher K. Hsee,et al.  Value seeking and prediction-decision inconsistency: Why don’t people take what they predict they’ll like the most? , 1999, Psychonomic bulletin & review.

[71]  B. Mellers.  Choice and the relative pleasure of consequences. , 2000, Psychological bulletin.

[72]  S. Sloman.  The empirical case for two systems of reasoning. , 1996 .

[73]  Daniel Kahneman,et al.  Memories of colonoscopy: a randomized trial , 2003, Pain.

[74]  Stephen M. Johnson,et al.  The affect heuristic in judgments of risks and benefits , 2000 .

[75]  John Beatty,et al.  The Empire of Chance: How Probability Changed Science and Everyday Life , 1989 .

[76]  W. J. Wittreich.  The Honi phenomenon: a case of selective perceptual distortion. , 1952, Journal of abnormal psychology.

[77]  D. Kahneman,et al.  Do Frequency Representations Eliminate Conjunction Effects? An Exercise in Adversarial Collaboration , 2001, Psychological science.

[78]  Norman H. Anderson,et al.  Contributions to information integration theory , 1991 .

[79]  Larry L. Jacoby,et al.  Dissociating Automatic and Consciously Controlled Effects of Study/Test Compatibility , 1996 .

[80]  D. Kahneman.  New Challenges to the Rationality Assumption , 1997, Legal Theory.

[81]  Daniel Kahneman,et al.  Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias , 1991 .

[82]  A. Tversky,et al.  Extensional versus intuitive reasoning: the conjunction fallacy in probability judgment , 1983 .

[83]  Jonathan Evans,et al.  Background beliefs in Bayesian inference , 2002, Memory & cognition.

[84]  Keith E. Stanovich,et al.  Discrepancies Between Normative and Descriptive Models of Decision Making and the Understanding/Acceptance Principle , 1999, Cognitive Psychology.

[85]  G. Clore,et al.  Mood and the use of scripts: does a happy mood really lead to mindlessness? , 1996, Journal of personality and social psychology.

[86]  Eldar Shafir,et al.  Choosing versus rejecting: Why some options are both better and worse than others , 1993, Memory & cognition.

[87]  M. Bar-Hillel,et al.  How alike is it versus how likely is it: A disjunction fallacy in probability judgments. , 1993 .

[88]  D. Myers.  Intuition: Its Powers and Perils , 2002 .

[89]  G. Bodenhausen.  Stereotypes as Judgmental Heuristics: Evidence of Circadian Variations in Discrimination , 1990 .

[90]  George M. Saviello.  Comment … , 1969, Comparative Studies in Society and History.

[91]  N. Epley,et al.  Putting adjustment back in the anchoring and adjustment heuristic. , 2002 .

[92]  Daniel Kahneman,et al.  Evaluation by Moments: Past and Future , 2002 .

[93]  Thomas E. Nygren,et al.  Influence of positive affect on the subjective utility of gains and losses: it is just not worth the risk. , 1988, Journal of personality and social psychology.

[94]  A. Tversky,et al.  Support theory: A nonextensional representation of subjective probability. , 1994 .

[95]  Veronica J. Dark,et al.  Perceptual Fluency and Recognition Judgments , 1985 .

[96]  Cass R. Sunstein,et al.  Shared Outrage and Erratic Awards: The Psychology of Punitive Damages , 1998 .

[97]  A. Pepitone,et al.  Social roles and strategies in prediction: Some determinants of the use of base-rate information. , 1984 .

[98]  F. Strack,et al.  Explaining the Enigmatic Anchoring Effect: Mechanisms of Selective Accessibility , 1997 .

[99]  D. Gilbert.  How mental systems believe. , 1991 .

[100]  D. Krantz,et al.  The use of statistical heuristics in everyday inductive reasoning , 1983 .

[101]  G. Loewenstein.  Out of control: Visceral influences on behavior , 1996 .

[102]  Christopher K. Hsee,et al.  Risk as Feelings , 2001, Psychological bulletin.

[103]  A. Tversky,et al.  Judgment under Uncertainty: Heuristics and Biases , 1974, Science.

[104]  John A. List,et al.  Preference Reversals of a Different Kind: The "More Is Less" Phenomenon , 2002 .

[105]  R. Zajonc.  Feeling and thinking : Preferences need no inferences , 1980 .

[106]  J. Bargh.  The automaticity of everyday life. , 1997 .

[107]  A. Tversky,et al.  Variants of uncertainty , 1982, Cognition.

[108]  Kenneth R. Hammond,et al.  Human Judgment and Social Policy: Irreducible Uncertainty, Inevitable Error, Unavoidable Injustice , 2000 .

[109]  Jaap Van Brakel,et al.  Foundations of measurement , 1983 .

[110]  Denis J. Hilton,et al.  Conversational Implicature, Conscious Representation, and the Conjunction Fallacy , 1991 .

[111]  A. Tversky,et al.  The framing of decisions and the psychology of choice. , 1981, Science.

[112]  Eldar Shafir,et al.  Deep thoughts and shallow frames; on the susceptibility to framing effects. , 2003 .

[113]  Ilana Ritov,et al.  Economic Preferences or Attitude Expressions?: An Analysis of Dollar Responses to Public Issues , 1999 .

[114]  A. Tversky,et al.  Foundations of Measurement, Vol. III: Representation, Axiomatization, and Invariance , 1990 .

[115]  E. Miller.  Handbook of Social Psychology , 1946, Mental Health.

[116]  D. Kahneman,et al.  Patients' memories of painful medical treatments: real-time and retrospective evaluations of two minimally invasive procedures , 1996, Pain.

[117]  D. Bernoulli.  Exposition of a New Theory on the Measurement of Risk , 1954 .

[118]  Eric J. Johnson,et al.  Incorporating the Irrelevant: Anchors in Judgments of Belief and Value , 2002 .

[119]  A. Tversky,et al.  Unpacking, repacking, and anchoring: advances in support theory. , 1997, Psychological review.

[120]  I. Sommier.  Emotions , 2005, The Classical Review.

[121]  N. Anderson.  Contributions To Information Integration Theory: Volume 2: Social , 1991 .

[122]  Gerd Gigerenzer,et al.  Presentation and content: The use of base rates as a continuous variable. , 1988 .

[123]  Baruch Fischhoff,et al.  Scope (in)sensitivity in elicited valuations , 1998 .