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The Rationality of Risky Decisions

A Changing Message

University of Salzburg, anton.kuehberger{at}sbg.ac.at

Over the years research in risky decision making has diagnosed variable degrees of irrationality in people's judgements and choices. In the 1960s an optimistic view dominated of a widely rational decision maker. The work of Tversky and Kahneman at the beginning of the 1970s led to a pessimistic view of basically flawed decision processes that frequently end up in `cognitive illusions'. In the 1980s a movement gained strength that pointed to the adaptiveness of seemingly irrational decisions. Recent work demonstrates that seemingly irrational choices may be due to different task construal between experimenters and participants. The respective evaluative change in what the rationality issue is generally taken to show is overdue, however. The negative message of fundamentally flawed human decision making has to be replaced by a more positive picture that acknowledges that some reactions to task and context are advantages rather than disadvantages of human decision making. Recent work on systems of thinking shows that different task construals can be meaningfully related to different systems of thinking, thus enabling a more unbiased treatment of the rationality issue.

Key Words: bias • choice • judgement • rationality • risk

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