Reid Hastie - Rational Choice in an Uncertain World: The Psychology of Judgment and Decision Making

Reid Hastie

University of Chicago

Robyn M. Dawes

Carnegie Mellon University

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The greatest enemy of truth is very often not the lie-deliberate, contrived, and dishonest-but the myth-persistent, pervasive, and unrealistic.

-John F. Kennedy

n this book, we present basic theories and research findings from the field .of judgment and decision making in as nontechnical a way as possible. Students have liked this approach in the classroom, and we hope that readers of this book will like it, too. We have been teaching this material for more than 30 years to students at Carnegie Mellon University, University of Chicago, University of Colorado, University of Oregon, Northwestern University, and Harvard University. We have found that these courses are more popular with students than any of the other topics that we teach.

A primary motivation for writing this book was our belief that an understanding of the principles of rational decision making can help people improve the quality of their choices and, thus, their lives. The material is not only profound and fascinating; it is practically useful as well. Again, students recognize this and have frequently told us, years after they completed our courses, that what they learned has made a difference in their everyday lives (a greater difference than knowing that their anterior cingulate is part of the mesocortical system or that hebephrenic schizophrenics are the silly ones).

The book is divided into six sections. Chapters 1 and 2 provide some history and introduce the main themes of rational versus descriptive approaches to judgment and decision making. Chapters 3 through 7 review the psychology of judgment. Chapter 8 focuses on the accuracy and rationality of our habits of judgment. Chapters 9 and 10 review what we know about where our basic values come from and how we make choices when there is little uncertainty about obtaining outcomes, but often much uncertainty about how much we will like them. Chapters 11 and 12 review the major theory of rational decision making, subjective expected utility theory, and the major descriptive psychological theory, prospect theory. Chapter 13 takes a look at cutting-edge research directions in the field. The final chapter reviews our major themes and conclusions, with an exhortation to appreciate the positive aspects of living with uncertainty. Finally, the Appendix provides an introduction to the concepts from mathematical probability theory that we rely on throughout the book.

We compare basic principles of rationality with actual behavior in making decisions. There is a discrepancy. Moreover, this discrepancy is due not to random errors or mistakes but to automatic and deliberate thought processes that influence how decision problems are conceptualized and how future possibilities in life are evaluated. The overarching argument is that our thinking processes are limited in systematic ways, and we review extensive behavioral research to support this conclusion.

We attempt to present as clearly and forcefully as possible the implications of the research we describe. Subsequent research will doubtless show that some of the conclusions reached in this book are incorrect or that they require modification, but we take the position that research-not anecdotes, not "plausible beliefs," not common sense, and not our everyday experience-should be the basis for understanding and evaluating our decision-making achievements and defeats. Nevertheless, we have used anecdotes as a teaching device. Over a combined experience of more than 50 years of study and teaching, we have collected many anecdotes that illustrate how our thinking about decision problems systematically deviates from rationality.

The theme of limited cognitive capacity conflicts with our preconceptions about how smart we are. While many of us are willing to accept the idea that our unconscious (for Freud) or "animal" (for Plato and Aristotle) or "hotheaded" natures may interfere with our reasoning, the idea that thinking per se is a fundamentally flawed and limited process is an unpleasant one. Moreover, many people reject the view that thinking is flawed on the grounds that our dominant-species status on this planet is related to our cerebral capacity, and evidenced by our technologically advanced civilizations. This commonsense argument is flawed in several respects.

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