Encyclopedia of Sociology

DECISION-MAKING THEORY AND RESEARCH

how the situation is characterized. Such situations
may involve more than one value (in this case, the
values are providing parents for a child and pre-
serving the cultural heritage that the child was
born into). Typically, absolute judgements reflect
an acceptance or rejection of one value, while
comparative judgments reflect more than one value.

GENERAL JUDGMENT AND DECISION-

MAKING ISSUES

That the best solution for a situation can seem
different if the situation is characterized different-
ly is one of the most important issues in judgment
and decision making. The theories mentioned
above (Bayes’s, EU, prospect, and rank-depend-
ent) assume problem invariance. That is, they
assume that people’s judgments will not vary with
how the problem is characterized. However, be-
cause the characterization of the problem affects
how people frame the problem, people’s decisions
often do vary. (Tversky and Kahneman 1981).

An implication of this variability is that elicit-
ing people’s values becomes difficult (Baron 1997;
1998). However, different methods can produce
contradictory results. For example, choice and
matching tasks often reveal different values prefer-
ences. Choice tasks are comparative judgments:
Do you prefer A or B? Matching tasks require
participants to estimate one dimension of an alter-
native so that its attractiveness matches that of
another alternative (e.g., program A will cure 60
percent of patients at a cost of $5 million, what
should B cost if it will cure 85 percent of patients?).

The difference produced by these tasks has
been extensively examined in studies of preference
reversals (Slovic and Lichtenstein 1983). Tversky,
Sattath, and Slovic (1988) have suggested that the
dimension of elicitation (e.g., probability or value)
will be weighted most, so reversals can result from
changing the elicitation dimension. Fischer and
Hawkins (1993) suggested that preference reversals
were the result of the compatibility between peo-
ple’s strategy for analyzing the problem and the
elicitation mode. Preference reversals clearly oc-
cur, but the cause of them continues to be debated
(cf. Payne, Bettman, and Johnson 1992).

Ideas about rationality have also been influ-

enced by the variability of people’s judgments.

Generally, the idea of rationality originated with a

theory and then examined whether people be-

haved in that way, rather than examining how

people behave and then suggesting what is ration-

al. That is, rationality has typically been examined

based on a prescriptive theory, such as Bayes’s or

EU, about how people should make decisions

rather than a descriptive theory based on how

people actually process information. When stud-

ies resulted in judgments that were inconsistent

with those prescriptive theories of decision mak-

ing, researchers concluded that people often acted

irrationally.

However, there is growing recognition that

study participants may be thinking of situations

differently than researchers have assumed (Chase,

Hertwig, and Gigerenzer 1998), which has led

several researchers to create theories about deci-

sion processing (e.g., Dougherty, Gettys, and Ogden

in press; Gigerenzer, Hoffrage, and Kleinbolting

1991) and use those theories to address rationality

issues rather than the reverse. Approaches that

focus on processing have been present in decision

theory for some time (cf. Brunswick 1952; Ham-

mond 1955), but they have not been dominant in

the field. The acknowledgement of multiple views

of rationality coupled with the poor explanations

of prescriptive theories for people’s actual deci-

sion behavior may shift the emphasis to process-

ing models.

Further consideration of the decision-making

process has led to other questions that are garner-

ing increased attention. For example, how do

people make decisions within dynamic environ-

ments? Generally, people make decisions in a

dynamic world (Brehmer 1990; Busemeyer and

Townsend 1993; Diehl and Sterman 1995), but

many decision-making theories (such as those re-

viewed above) do not account for the dynamics of

the environment. Also, how do people’s emotions

affect the decision-making process? Decisions can

involve topics that evoke emotion or have emo-

tional consequences (such as regret, Gilovich and

Medvec 1995). Some decision theories have tried

to include emotional considerations in decision