The unprecedented advancements in the physical

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Unformatted text preview: ical sciences and information theory and the realisation of the enormous capabilities inherent in computing machines and information technology, strengthened and encouraged the belief in rational agents who were considered to be in full control of their thoughts and actions, and capable of following the normative desiderata. Decision failures were exclusively attributed to the perceptual-cognitive machine and could, it was assumed, be avoided by increasing mental effort and by appropriate training (Keren, 1996). Consequently, the presupposition that normative models (with, conceivably, some minor modifications) can concurrently serve descriptive accounts was introduced with little contention (Keren, 1996). For example, in a frequently quoted article, Peterson and Beach (1967 p29) concluded that: “In general, the results indicate that probability theory and statistics can be used as the basis of psychological models that integrate and account for human performance in a wide range of inferential tasks.” There was little attempt to explain human behaviour (Keren, 1996). Even the most transparent cases of discrepancy between human behaviour and normative models (for example, see the often referred to Allais’ paradox outlined in Goodwin and Wright, 25 1991 pp83-85) did not change the dominating outlook (Keren, 1996). In 1954, Ward Edwards published his seminal paper “The Theory of Decision-Making” which marked the birth of behavioural decision theory. Since then, the past forty years have witnessed a gradual transition in which the descriptive facet has received growing attention (Keren, 1996). Behavioural decision theory questioned the assumption of normative models that decisions are, and ought to be, made on solely rational grounds (Lipshitz and Strauss, 1997). Such an assumption means that non-cognitive factors such as emotions, motivations, or moral considerations should have no impact on the decision process unless they can be justified by rational means. Both causal observations as well as growing empirical evidence suggest that this assumption is irreconcilable with any tenable behavioural descriptive theory (Keren, 1996). Much of this research, under the heading of “heuristics and biases”, has portrayed decision-makers as imperfect information processing systems that are prone to different types of error. The most pertinent of these studies can be grouped under the headings of probability and preference assessment and are discussed below. • Probability assessments - As indicated above, decision analysis, and many other normative models in decision theory, rely on the use of probability for modelling the uncertainty surrounding future outcomes. Considerable work has been done on the assessment of subjective probabilities, although much of it has focused on the internal consistency of human assessment (Clemen, 1999). For example, articles in the volume by Kahneman, Slovic and Tversky (1982) emphasise how heuristic judgement processes lead to cognitive biases. For the most part, this work...
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