Decision-Making: Cognitive and Emotional
How do we make decisions? Many of us like to imagine that we’re rational creatures, deciding what to do by weighing the anticipated risks against the benefits of our actions. But 50 years of psychology and behavioral economics research has told a much different story.
Princeton University psychologist Daniel Kahneman won a Nobel Prize in 2002 for the work he did in the 1970s with colleague Amos Tversky on “prospect theory,” based on the finding that decision-making often occurs through cognitive shortcuts called “heuristics” that have the potential to cause errors in how we estimate risk.1 For example, our brains use an “availability heuristic” to make judgments based on information that’s easily recalled due to recent exposure or because it’s based on personal experience. We might therefore […]
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Last modified: July 15, 2020