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date: 22 February 2020

Abstract and Keywords

This chapter reviews selected psychological research on human decision making. The classical, rational theory of choice holds that decisions reflect consistent, stable preferences, which are unaffected by logically immaterial changes in context, presentation, or description. In contrast, empirical research has found preferences to be sensitive to logically irrelevant changes in the context of decision, in how options are described, and in how preferences are elicited. Decisions are also swayed by affect and by decisional conflict and are often driven by the reasons that are most accessible at the moment of choice, leading to preference reversals when, for example, different reasons are made accessible. More broadly, decision makers tend to adopt a “local” perspective: They accept decisions as described and focus on the most salient attributes, even when a more “global” perspective, less influenced by local context and frame, might yield decisions that are less biased by temporary and irrelevant concerns. Future directions and implications for theory and practice are discussed.

Keywords: choice, uncertainty, loss aversion, framing, preference reversals, intertemporal choice, priming

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