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Frontiers | Toward a general theoretical framework for judgment and decision-making | Decision Neuroscience

See on Scoop.itBounded Rationality and Beyond

Over the past 30 years, behavioral and experimental economists and psychologists have made great strides in identifying phenomena that cannot be explained by the classical model of rational choice–anomalies in the discounting of future wealth, present bias, loss aversion, the endowment effect, and aversion to ambiguity, for example. In response to these findings, there has been an enormous amount of research by behavioral scientists aimed at modeling and understanding the nature of these biases. However, these models, typically assuming situation-specific psychological processes, have shed limited light on the conditions for and boundaries of the different biases, substantially neglecting their relative importance and joint effect. Much less attention has been paid to the investigation of the links between different biases. As a consequence of this approach, it is not always clear which model should be used to predict behavior in a new setting, and maybe a more general theory is needed. We believe that the field of neuroeconomics, which has experienced a rapid growth over the past decade, can play an important role in bridging these gaps, contributing to the building of a general theoretical framework for judgment and decision-making behaviors.

Apparently inconsistent biases
One of the main insights from decision-making studies is that people tend to overweight small probability events in risky one-shot decisions (Kahneman & Tversky, 1979). This tendency can explain why, for example, people buy lottery tickets and insurance. However, one might wonder, for instance, why in most Western Countries driving insurance is compulsory (how many drivers would spontaneously ensure?); Why the enforcement of safety rules at the workplace and of safe medical procedures have become social issues of primary importance, causing massive public and private investments (Erev et al., 2010); or why only a small share of people actually participate in lotto games on a regular basis (Pérez & Humphreys, 2011). 

See on journal.frontiersin.org

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