From Shakespeare to Spielberg

(with apologies to Paul Slovic):

Some Reflections on Modes of Decision Making

Elke U. Weber

J/DM Meeting

November 1998

• What a piece of work is man. How noble in reason. How infinite in faculty. In apprehension how like a god! Hamlet, II, ii

• I've got a bad feeling about this! Raiders of the Lost Ark

• Feel the force, Luke. Star Wars

Qualitatively-different Modes of Making Decisions

• Cost-benefit-based decision making (Edwards, 1954; von Winterfeldt & Edwards, 1986; Payne, Bettman, & Johnson, 1993)

• Category-based or rule-based decision making (Simon, 1990; Beach & Mitchell, 1987, 1990):– nondeliberative decisions (Ronis, Yates, & Kirscht, 1989)

– stereotype-based decisions (Fiske & Pavelchak, 1986)

– case-based decisions (Chase & Simon, 1973; Klein, 1998)

– principle-based decisions (Prelec & Herrnstein, 1991)

• Role-based decision making (March, 1994)

• Reason- or argument-based decision making (Shafir, Simonson, & Tversky, 1993; Hogarth & Kunreuther, 1995; Tyszka, 1998)

• Affect-based decision making (Damasio, 1993; Epstein, 1994; Loewenstein, Weber, Hsee & Welch, 1998; Wright, 1975)

• Story-based decision making (Pennington & Hastie, 1988, 1992, 1993; Goldstein & Weber, 1995)

Emerging list of qualitatively-different decision modes

• Calls for a meta-decision framework that predicts (implicit) decision mode selection

• Decision mode prediction matters because mode often affects/dictates outcome

• Conceptual extension of the pioneering Adaptive-Decision-Maker program of Payne, Bettman, & Johnson (1988, 1993)– broader range of decision modes

– broader range of selection criteria • beyond effort and accuracy

Decision Making as Constrained Optimization

• Specification of Objective Function

• Identification of Constraints

Identification of Constraints•Cognitive Limitations (Simon, 1954)

– attention – working memory

•Emotional Limitations – finite pool of resilience (Linville & Fischer, 1991)– self-control problems

– mental accounting (Thaler, 1985)

– precommitment strategies (Ainslie, 1975)

Identification of Constraints

• Extremely productive chapter in history of J/DM

• Chapter that is written

More Accurate Specification of Objective Function

• Selten (1997) – economic conceptualization of human

motivation is incomplete at best

• In addition to material well-being, people have been shown to care about– post-decisional consequences and comparisons

• Loomes & Sugden, 1982; Mellers, Schwartz, & Ritov, 1997; Birnbaum & Stegner, 1979; Weber, 1994

– fairness and justice• Mellers & Baron, 1993

– justifiability • Shafir, Simonson, & Tversky, 1993; Tetlock, 1992

– confidence and self-esteem• Larrick, 1993

• Habermas’ (1972) taxonomy of human interests and concerns– technical concerns: instrumental action– practical concerns: social understanding– emancipatory concerns: reflection, autonomy

Predictive framework of (implicit) decision mode selection

• Predictor variables should include – characteristics of decision maker

• basic human motivation

• individual differences

• cultural differences

– characteristics of decision situation• decision context

• decision content

Content-Dependence of Decision Making

• Goldstein and Weber (1995) show progression from content-independent to content-dependent theorizing in – memory– learning– deductive reasoning

• evidence of necessity of content-dependent theory for decision making (Frisch, 1993; Gigerenzer & Hug, 1992)

Decision Mode Selection as Mechanism for Content Dependence

• different content domains prime different facets of human motivation

• different needs are best served by different decision modes

• different decisions modes can lead to different choices

How does decision mode selection work at a process level?

• Must involve similarity-based recognition process

• Research approach: Make implicit categorization explicit – Tada & Weber, 1998

Unanswered questions related to availability of different ways of

making decision

• Need for research on use of multiple modes of decision making– Loewenstein, Weber, Hsee, and Welch (1998)

argue for primacy of emotion-based decision making in risky choice

– yet, decisions are probably usually made on multiple levels

Questions related to multiple modes of decision making

• Do modes operate sequentially or in parallel?

• How do they combine? – Race model? Majority rule? Average solution?– How are conflicts in suggested course of action

resolved?– Is confidence in final answer related to such

conflicts?

Summary

• broader conceptualization of human nature may provide more descriptive objective functions

• broader appreciation of the adaptive functions of different decision modes will help in predicting decision mode selection

• studying criteria and processes by which people (implicitly) select decision modes may provide parsimoneous explanation of content-dependence of decision making

References• Ainslie, G. (1975). Specious reward: A behavioral theory of impulsiveness and impulse control. Psychological

Bulletin, 82, 463-496.

• Beach, L.R. (1990). Image theory: Decision Making in Personal and Organizational contexts. Chichester, UK: John Wiley.

• Beach, L.R., & Mitchell, T.R. (1987). Image theory: Principles, plans, and goals in decision making. Acta Psychologica, 66, 201-220.

• Beach, L.R., & Mitchell, T.R. (1990). Image theory: A behavioral theory of decisions in organizations. In B. M. Staw & L. L. Cummings (Eds.), Research in Organizational Behavior (Vol. 12). Greenwich, CT: JAI Press.

• Birnbaum, M. H., & Stegner, S. E. (1979). Source credibility in social judgment: Bias, expertise, and the judge’s point of view. Journal of Personality and Social Psychology, 37, 48-74.

• Blais, A.-R., & Weber, E. U. (1998). Women, decision content, and other dangerous things. Working Paper, Center for Behavioral Decision Theory, Ohio State University.

• Chase, W.G., & Simon, H.A. (1973). Perception in chess. Cognitive Psychology, 4, 55-81.

• Damasio, A. R. (1993). Descartes’ Error. New York: Avon Books.

• Edwards, W. (1954). The theory of decision making. Psychological Bulletin, 51, 380-417.

• Epstein, S. (1994). Integration of the cognitive and the psychodynamic unconscious. American Psychologist, 49, 709-724.

• Fein, E., & Weber, E. U. (1998). Content-specific methods of decision making. Working Paper, Center for Behavioral Decision Theory, Ohio State University.

• Fiske, S.T., & Pavelchak, M.A. (1986). Category-based versus piecemeal-based affective responses: Developments in schema-triggered affect. In R.. Sorrentino & E.T. Higgins (Eds.), Handbook of Motivation and Cognition: Foundations of Social Behavior (pp. 167-203). New York: Guilford Press.

• Frisch, D. (1993). Reasons for framing effects. Organizational Behavior and Human Decision Processes, 54, 399-429.

• Gigerenzer, G., & Hug, K. (1992). Domain-specific reasoning: Social contracts, cheating, and perspective changes. Cognition, 43, 127-171.

References, cont’d• Goldstein, W. M. & Weber, E. U. (1995). Content and its discontents: The use of knowledge in decision making.

In J. R. Busemeyer, R. Hastie, D. L. Medin (Eds.) Decision making from a cognitive perspective. The Psychology of Learning and Motivation, Vol. 32 (pp. 83-136). New York: Academic Press.

• Habermas, J. (1972). Knowledge and Human Interests. Boston, MA: Beacon Press.

• Hogarth, R., & Kunreuther, H. (1995). Decision making under ignorance: Arguing with yourself. Journal of Risk and Uncertainty, 10, 15-36.

• Klein, G. (1998). Sources of power: How people make decisions. MIT Press.

• Larrick, R.P. (1993). Motivational factors in decision theories: The role of self-protection. Psychological Bulletin, 113, 440-450.

• Linville, P.W., & Fischer, G.W. (1991). Preferences for separating or combining events. Journal of Personality and Social Psychology, 59, 5-21.

• Loewenstein, G.F., Weber, E.U., Hsee, C.K., & Welch, E. (1998). Risk as feelings. Working Paper, CMU.

• Loomes, G., & Sugden, R. (1982). Regret theory: An alternative theory of rational choice under uncertainty. Economic Journal, 92, 805-824.

• March, J. G. (1994). A Primer of Decision Making: How Decisions Happen. New York: The Free Press.

• Mellers, B.A., & Baron, J. (Eds.). (1993). Psychological Perspectives on Justice: Theory and Applications. Cambridge, UK: Cambridge University Press.

• Mellers, B. A., Schwartz, A., Ho, K., Ritov, I. (1997). Decision affect theory: Emotional reactions to the outcomes of risky options. Psychological Science, 8, 423-429.

• Payne, J.W., Bettman, J.R., & Johnson, E.J. (1988). Adaptive strategy selection in decision making. Journal of Experimental Psychology: Learning, Memory, and Cognition, 14, 534-552.

• Payne, J.W., Bettman, J.R., & Johnson, E.J. (1993). The Adaptive Decision Maker. Cambridge: Cambridge University Press.

• Pennington, N., & Hastie, R. (1988). Explanation-based decision making: The effects of memory structure on judgment. Journal of Experimental Psychology: Learning, Memory, and Cognition, 14, 521-533.

References, cont’d• Pennington, N., & Hastie, R. (1992). Explaining the evidence: Tests of the story model for juror decision making.

Journal of Personality and Social Psychology, 62, 189-206.• Pennington, N., & Hastie, R. (1993). Reasoning in explanation-based decision making. Cognition, 49, 123-163.• Prelec, D. & Herrnstein, R. (1991). Preferences or principles: Alternative guidelines for choice. In R. J. Zeckhauser

(Ed.), Strategy and Choice. Cambridge: MIT Press.• Rabin, M. (1993). Incorporating fairness into game theory and economics. American Economic Review, 83, 1281-1302.• Ronis, D.L., Yates, J.F., & Kirscht, J.P. (1989). Attitudes, decisions, and habits as determinants of repeated behavior.

In A.R. Pratkanis, S.J. Breckler, & A.G. Greenwald (Eds.), Attitude Structure and Function (pp. 213-239). Hillsdale, N.J.Erlbaum.

• Selten, R. (1997). Features of experimentally observed bounded rationality. Discussion Paper B-421, University of Bonn.

• Shafir, E., Simonson, I., & Tversky, A. (1993). Reason-based choice. Cognition, 49, 11-36.• Simon, H.A. (1956). Rational choice and the structure of the environment. Psychological Review, 63, 129-138.• Simon, H.A. (1990). Invariant of human behavior. Annual Review of Psychology, 41, 1-19. • Tada, Y., & Weber, E. U. (1998). Representing psychological dimensions of decisions: Implications for behavioral

decision models. Proceedings of the Twentieth Annual Conference of the Cognitive Science Society (pp. 1049-1054). Hillsdale NJ: Lawrence Erlbaum.

• Tetlock, P. E. (1992). The impact of accountability on judgment and choice: Toward a social contingency model. Advances in Experimental Social Psychology, 25, 331-376

• Thaler, R. (1985). Mental accounting and consumer choice. Marketing Science, 4, 199-214.• Tyszka, T. (1998). Two pairs of conflicting motives in decision making. Organizational Behavior and Human Decision

Processes, 74, 189-211.• Weber, E. U. (1994). From subjective probabilities to decision weights: The effect of asymmetric loss functions on

the evaluation of uncertain outcomes and events. Psychological Bulletin, 115, 228‑242.• Wright, P. (1975). Consumer choice strategies: Simplifying vs. optimizing. Journal of Marketing Research, 11, 60-67.

References• Ainslie, G. (1975). Specious reward: A behavioral theory of impulsiveness and impulse control. Psychological Bulletin, 82, 463-496.

• Beach, L.R. (1990). Image theory: Decision Making in Personal and Organizational contexts. Chichester, UK: John Wiley.

• Beach, L.R., & Mitchell, T.R. (1987). Image theory: Principles, plans, and goals in decision making. Acta Psychologica, 66, 201-220.

• Beach, L.R., & Mitchell, T.R. (1990). Image theory: A behavioral theory of decisions in organizations. In B. M. Staw & L. L. Cummings (Eds.), Research in Organizational Behavior (Vol. 12). Greenwich, CT: JAI Press.

• Birnbaum, M. H., & Stegner, S. E. (1979). Source credibility in social judgment: Bias, expertise, and the judge’s point of view. Journal of Personality and Social Psychology, 37, 48-74.

• Blais, A.-R., & Weber, E. U. (1998). Women, decision content, and other dangerous things. Working Paper, Center for Behavioral Decision Theory, Ohio State University.

• Chase, W.G., & Simon, H.A. (1973). Perception in chess. Cognitive Psychology, 4, 55-81.

• Damasio, A. R. (1993). Descartes’ Error. New York: Avon Books.

• Edwards, W. (1954). The theory of decision making. Psychological Bulletin, 51, 380-417.

• Epstein, S. (1994). Integration of the cognitive and the psychodynamic unconscious. American Psychologist, 49, 709-724.

• Fein, E., & Weber, E. U. (1998). Content-specific methods of decision making. Working Paper, Center for Behavioral Decision Theory, Ohio State University.

• Fiske, S.T., & Pavelchak, M.A. (1986). Category-based versus piecemeal-based affective responses: Developments in schema-triggered affect. In R.. Sorrentino & E.T. Higgins (Eds.), Handbook of Motivation and Cognition: Foundations of Social Behavior (pp. 167-203). New York: Guilford Press.

• Frisch, D. (1993). Reasons for framing effects. Organizational Behavior and Human Decision Processes, 54, 399-429.

• Gigerenzer, G., & Hug, K. (1992). Domain-specific reasoning: Social contracts, cheating, and perspective changes. Cognition, 43, 127-171.

• Goldstein, W. M. & Weber, E. U. (1995). Content and its discontents: The use of knowledge in decision making. In J. R. Busemeyer, R. Hastie, D. L. Medin (Eds.) Decision making from a cognitive perspective. The Psychology of Learning and Motivation, Vol. 32 (pp. 83-136). New York: Academic Press.

• Habermas, J. (1972). Knowledge and Human Interests. Boston, MA: Beacon Press.

• Hogarth, R., & Kunreuther, H. (1995). Decision making under ignorance: Arguing with yourself. Journal of Risk and Uncertainty, 10, 15-36.

• Klein, G. (1998). Sources of power: How people make decisions. MIT Press.

• Larrick, R.P. (1993). Motivational factors in decision theories: The role of self-protection. Psychological Bulletin, 113, 440-450.

• Linville, P.W., & Fischer, G.W. (1991). Preferences for separating or combining events. Journal of Personality and Social Psychology, 59, 5-21.

• Loewenstein, G.F., Weber, E.U., Hsee, C.K., & Welch, E. (1998). Risk as feelings. Working Paper, CMU.

• Loomes, G., & Sugden, R. (1982). Regret theory: An alternative theory of rational choice under uncertainty. Economic Journal, 92, 805-824.

• March, J. G. (1994). A Primer of Decision Making: How Decisions Happen. New York: The Free Press.

• Mellers, B.A., & Baron, J. (Eds.). (1993). Psychological Perspectives on Justice: Theory and Applications. Cambridge, UK: Cambridge University Press.

• Mellers, B. A., Schwartz, A., Ho, K., Ritov, I. (1997). Decision affect theory: Emotional reactions to the outcomes of risky options. Psychological Science, 8, 423-429.

• Payne, J.W., Bettman, J.R., & Johnson, E.J. (1988). Adaptive strategy selection in decision making. Journal of Experimental Psychology: Learning, Memory, and Cognition, 14, 534-552.

• Payne, J.W., Bettman, J.R., & Johnson, E.J. (1993). The Adaptive Decision Maker. Cambridge: Cambridge University Press.

• Pennington, N., & Hastie, R. (1988). Explanation-based decision making: The effects of memory structure on judgment. Journal of Experimental Psychology: Learning, Memory, and Cognition, 14, 521-533.

• Pennington, N., & Hastie, R. (1992). Explaining the evidence: Tests of the story model for juror decision making. Journal of Personality and Social Psychology, 62, 189-206.

• Pennington, N., & Hastie, R. (1993). Reasoning in explanation-based decision making. Cognition, 49, 123-163.

• Prelec, D. & Herrnstein, R. (1991). Preferences or principles: Alternative guidelines for choice. In R. J. Zeckhauser (Ed.), Strategy and Choice. Cambridge: MIT Press.

• Rabin, M. (1993). Incorporating fairness into game theory and economics. American Economic Review, 83, 1281-1302.

• Ronis, D.L., Yates, J.F., & Kirscht, J.P. (1989). Attitudes, decisions, and habits as determinants of repeated behavior. In A.R. Pratkanis, S.J. Breckler, & A.G. Greenwald (Eds.), Attitude Structure and Function (pp. 213-239). Hillsdale, N.J.Erlbaum.

• Selten, R. (1997). Features of experimentally observed bounded rationality. Discussion Paper B-421, University of Bonn.

• Shafir, E., Simonson, I., & Tversky, A. (1993). Reason-based choice. Cognition, 49, 11-36.

• Simon, H.A. (1956). Rational choice and the structure of the environment. Psychological Review, 63, 129-138.

• Simon, H.A. (1990). Invariant of human behavior. Annual Review of Psychology, 41, 1-19.

• Tada, Y., & Weber, E. U. (1998). Representing psychological dimensions of decisions: Implications for behavioral decision models. Proceedings of the Twentieth Annual Conference of the Cognitive Science Society (pp. 1049-1054). Hillsdale NJ: Lawrence Erlbaum.

• Tetlock, P. E. (1992). The impact of accountability on judgment and choice: Toward a social contingency model. Advances in Experimental Social Psychology, 25, 331-376

• Thaler, R. (1985). Mental accounting and consumer choice. Marketing Science, 4, 199-214.

• Tyszka, T. (1998). Two pairs of conflicting motives in decision making. Organizational Behavior and Human Decision Processes, 74, 189-211.

• Weber, E. U. (1994). From subjective probabilities to decision weights: The effect of asymmetric loss functions on the evaluation of uncertain outcomes and events. Psychological Bulletin, 115, 228‑242.

• Wright, P. (1975). Consumer choice strategies: Simplifying vs. optimizing. Journal of Marketing Research, 11, 60-67.