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

About the Book

"The authors are highly respected as leading figures in the field of judgment and decision making. There are many existing books on topics related to judgment and decision making, but this book makes a unique contribution to this field because of its systematic and scholarly approach, and its breadth of coverage."
—Robert Goldstone, Indiana University

"Reid Hastie and Robyn Dawes are two of the most eminent researchers in the field. I know these authors to be excellent writers and I have no doubt that their writing style will be suitable for my students."
—William Goldstein, University of Chicago

In the new edition of this award-winning text, renowned authors Reid Hastie and Robyn Dawes compare and contrast the basic principles of rationality with actual behavior in making decisions. This book explores theories and research findings from the field of judgment and decision making in a non-technical manner, using anecdotes as a teaching device. Intended as an introductory textbook for advanced undergraduate and graduate students, the material not only is of scholarly interest but is practical as well.

New to This Edition

• Chapter introductions, conclusions, and cross-references between chapters make the text more student friendly
• An abundance of examples from areas such as finance, medicine, law, and engineering anchor concepts to the real world
• Increased consideration of descriptive, psychological models of decision making augment the original emphasis on normative, rational, "Expected Utility Theory" models, bring the book up to date
• Balance among the three major approaches to judgment and decision making: cognitive psychological analyses of mental processes and heuristics, descriptive algebraic models of judgment and decision processes, and rational models of decision making

Table of Contents:
Chapter 1 - Thinking and Deciding 1.1 Decision Making Is a Skill 1.2 Thinking: automatic and Controlled 1.3 The Computational Model of the Mind 1.4 Through the Darkest Psychoanalytical Theory and Behaviorism to Cognition 1.5 Quality of Choice: Rationality 1.6 The Invention of Modern Decision Theory Chapter 2 - What Is Decision Making? 2.1 Definition of a Decision 2.2 Picturing Decisions 2.3 Decision Quality, Revisited 2.4 Incomplete Thinking: A Legal Example 2.5 Over-Inclusive Thinking: Sunk Costs 2.6 The Rationality of Considering Only the Future 2.7 The Rest of This Book Chapter 3 - A General Framework for Judgment 3.1 A Conceptual Framework for Judgment and Prediction 3.2 Research With the Lens Model Framework 3.3 Capturing Judgment in Statistical Models 3.4 How Do Statistical Models Beat Human Judgment? 3.5 Practical Implications of the Surprising Success of the Linear Model 3.6 Objections and Rebuttals 3.7 The Role of Judgment in Choices and Decisions Chapter 4 - The Fundamental Judgment Strategy: Anchoring and Adjustment 4.1 Salient Values 4.2 Anchoring and (Insufficient) Adjustment 4.3 Anchoring on Ourselves 4.4 Anchoring the Past in the Present Chapter 5 - Judging Heuristically 5.1 Going Beyond the Information Given 5.2 Estimating Frequencies and probabilities 5.3 Availability of Memories 5.4 Biased Samples in Memory 5.5 Biased Sampling From Memory 5.6 Availability to the Imagination 5.7 From Availability to Probablility and Causality 5.8 Judgment by Similarity: Same Old Things 5.9 Representative Thinking 5.10 The Ratio Rule Chapter 6 - Explanation-Based Judgments 6.1 Everyone Likes a Good Story 6.2 The Conjunction Probabliity Error (Again) 6.3 Judging From Explanations 6.4 Legal Scenarios: The Best Story Wins in the Courtroom 6.5 Scenarios About Ourselves 6.6 Scenarios About the Unthinkable 6.7 Hindsight: Reconstructing the Past 6.8 Sometimes It′s Better to Forget Chapter 7 - Chance and Cause 7.1 Misconceptions About Chance 7.2 Illusions of Control 7.3 Seeing Causal Structure Where It Isn′t 7.4 Regression Toward the Mean 7.5 Reflections on Our Inability to Accept Randomness Chapter 8 - Thinking Rationally About Uncertainty 8.1 What to Do About the Biases 8.2 Getting Started Thinking in Terms of Probabilities 8.3 Comprehending the Situation Being Judged 8.4 Testing for Rationality 8.5 How to Think About Inverse Probabilities 8.6 Avoiding Subadditivity and Conjunction Errors 8.7 The Other Side of the Coin: The Probability of a Disjunction of Events 8.8 Changing Our Minds: Bayes′s Theorem 8.9 Statistical Decision Theory 8.10 Concluding Comment on Rationality Chapter 9 - Evaluating Consequences: Fundamental Preferences 9.1 What Good is Happiness? 9.2 The Role of Emotions in Evaluations 9.3 The Value of Money 9.4 Decision Utility -- Predicting What We will Value 9.5 Constructing Values Chapter 10 - From Preferences to Choices 10.1 Deliberate Choices Among Complex Alternatives 10.2 Ordering Alternatives 10.3 Grouping Alternatives 10.4 Choosing Alternatives 10.5 How to Make Good Choices Chapter 11 - A Rational Decision Theory 11.1 Formally Defining Rationality 11.2 Making Theories Understandable -- The Axiomatic Method 11.3 Defining Rationality: Expected Utility Theory 11.4 Traditional Objections to the Axioms 11.5 The Shoulds and Dos of the System 11.6 Some Bum Raps for Decision Analysis Chapter 12 - A Descriptive Decision Theory 12.1 Non-expected Utility Theories 12.2 Gain-Loss Framing Effects 12.3 Loss Aversion 12.4 Look to the Future Chapter 13 - What′s Next? New Directions in Research on Judgment and Decision Making 13.1 The Neuroscience of Decisions 13.2 Emotions in Decision Making 13.3 The Rise of Experimental Methods to Study Dynamic Decisions 13.4 Do We Really Know Where We′re Headed? Chapter 14 - In Praise of Uncertainty 14.1 Uncertainty as Negative 14.2 The Illusion of Hedonic Certainty 14.3 The Price of Denying Uncertainty 14.4 Two Cheers for Uncertainty 14.5 Living With Uncertainty