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We solve a general class of dynamic rational inattention problems in which an agent repeatedly acquires costly information about an evolving state and selects actions. The solution resembles the choice rule in a dynamic logit model, but it is biased toward an optimal default rule that is independent of the realized state. The model provides the same fit to choice data as dynamic logit, but, because of the bias, yields different counterfactual predictions. We apply the general solution to the study of (i) the status quo bias; (ii) inertia in actions leading to lagged adjustments to shocks; and (iii) the tradeoff between accuracy and delay in decision-making.

The doctrinal paradox is analysed from a probabilistic point of view assuming a simple parametric model for the committee’s behaviour. The well known premise-based and conclusion-based majority rules are compared in this model, by means of the concepts of false positive rate (FPR), false negative rate (FNR) and Receiver Operating Characteristics (ROC) space. We introduce also a new rule that we call path-based, which is somehow halfway between the other two. Under our model assumptions, the premise-based rule is shown to be the best of the three according to an optimality criterion based in ROC maps, for all values of the model parameters (committee size and competence of its members), when equal weight is given to FPR and FNR. We extend this result to prove that, for unequal weights of FNR and FPR, the relative goodness of the rules depends on the values of the competence and the weights, in a way which is precisely described. The results are illustrated with some numerical examples.

Can a toolbox of simple heuristic rules help explain lottery choices relative to expected utility theory (EUT)? While a mixture model of EUT plus heuristic rules will obviously fit data better than EUT only, given the small sample sizes, there is a danger of overfitting. Therefore, instead of goodness-of-fit measures, we focus on forecasting performance. Using two data sets of binary lottery choices and reasonable holdout subsets for testing forecasting performance, we find that the EUT-only model forecasts better than the toolbox mixture model with EUT. Even when the toolbox model with EUT fits the data significantly better, EUT-only forecasts better.

Despite being a well-studied decision rule, the Slater rule has not been analyzed axiomatically. In this paper, we show that it is the only rule which is unbiased, monotone, tournamental, tie-breaking, and gradual. Thereby we provide a characterization of it for the first time. We also show these axioms to be logically independent.

Pertinent to modern industry, administration, finance and society, the most pressing issue for firms today is how to reapproach the way we think and work in business. With topics ranging from improving productivity and coaxing economic growth after periods of market inactivity, Complex Decision-Making in Economy and Finance offers pragmatic solutions for dealing with the critical levels of disorder and chaos that have developed throughout the modern age. This book examines how to design complex products and systems, the benefits of collective intelligence and self-organization, and the best methods for handling risks in problematic environments. It also analyzes crises and how to manage them. This book is of benefit to companies and public bodies with regards to saving assets, reviving fortunes and laying the groundwork for robust, sustainable societal dividends. Examples, case studies, practical hints and guidelines illustrate the topics, particularly in finance.

Despite the attention garnered in the media about police use of force, there have been relatively few investigations of perceptual–cognitive skill in law enforcement using the naturalistic-decision-making approach. In this paper, we provide an overview of a series of four studies in which we investigated experience-based differences in police officer decision making in complex, rapidly unfolding, and uncertain situations. In these naturalistic situations, decision makers must first generate—for themselves—at least one option before intervening or taking action. We sought to test hypotheses about option-generation processes derived from apparently competing theories of skilled decision making and expert sensemaking. These two theories can be considered as representing two phases of decision making: skilled decision making focuses on selecting an appropriate course of action, while expert sensemaking addresses situational assessment and diagnosis. In the studies, we employed a variety of cognitive task analysis techniques, including experiments using option-generation and temporal-occlusion methods and process tracing measures (e.g., retrospective verbal reports, video-stimulated recall). Based on the data, we conclude that the two theoretical approaches—skilled decision making and expert sensemaking—appear to be complementary rather than competing. When the situation is relatively familiar, officers can quickly recognize the situation and identify an appropriate response. However, when situations are less familiar, more complex, and/or more uncertain, officers may need to engage in rapid sensemaking or situational diagnosis so that they can quickly comprehend the situation. We discuss implications for law enforcement officers and for law enforcement training.

Chronic pain leads to reduced quality of life for patients, and strains health systems worldwide. In the US and some other countries, the complexities of caring for chronic pain are exacerbated by individual and public health risks associated with commonly used opioid analgesics. To help understand and improve pain care, this article uses the data frame theory of sensemaking to explore how primary care clinicians in the US manage their patients with chronic noncancer pain. We conducted Critical Decision Method interviews with ten primary care clinicians about 30 individual patients with chronic pain. In these interviews, we identified several patients, social/environmental, and clinician factors that influence the frames clinicians use to assess their patients and determine a pain management plan. Findings suggest significant ambiguity and uncertainty in clinical pain management decision making. Therefore, interventions to improve pain care might focus on supporting sensemaking in the context of clinical evidence rather than attempting to provide clinicians with decontextualized and/or algorithm-based decision rules. Interventions might focus on delivering convenient and easily interpreted patient and social/environmental information in the context of clinical practice guidelines.

Das Erstarken populistischer Bewegungen setzt etablierte Institutionen und politische Repräsentanten unter Druck. Verleihen Rechtspopulisten nur einem substantiellen Dissens, insbesondere in der Zuwanderungspolitik, Ausdruck oder stellen sie darüber hinaus den prozeduralen Konsens, auf dem die Demokratie beruht, infrage? Wir argumentieren, dass die Stabilität des prozeduralen Konsenses davon abhängt, inwieweit Präferenzen über demokratische Entscheidungsverfahren intrinsisch oder instrumentell motiviert sind. Anhand von Daten aus einer über das GESIS-Panel durchgeführten Befragung zeigen wir, dass insbesondere die Forderung nach Volksabstimmungen in erheblichem Ausmaß von substantiellen Politikpräferenzen motiviert, also instrumentell ist. Darüber hinaus finden wir Hinweise darauf, dass die Ablehnung von Zuwanderung mit der Befürwortung direktdemokratischer Verfahren und einem instrumentellen Demokratieverständnis zusammenhängt, worin sich eine allgemeinere populistische Geisteshaltung ausdrücken könnte. Growing support for populist movements puts established institutions and political representatives under pressure. Are right-wing populists merely voicing substantial dissent, in particular on immigration policies? Or are they also challenging the procedural consensus our democracy is based upon? We argue that the stability of the procedural consensus depends upon whether preferences over democratic decision-making procedures are intrinsically or instrumentally motivated. On the basis of data from the GESIS-panel, we show that in particular the call for referenda is significantly motivated by substantial policy-preferences and is thus instrumentally motivated. Moreover, we find some evidence that negative attitudes towards immigration are correlated with support for direct democracy and an instrumentalist understanding of democracy, which might signify a more general populist attitude.

Attraction effect is observed when consumers, who are indifferent regarding two brands, disproportionately choose one alternative (the \"target\") over the other (the \"competitor\") when a decoy brand, uniformly inferior to the target but not the competitor, is introduced into the choice set. While this effect is widely known and replicated, there is less clarity as to the mechanisms underlying the attraction effect. In this paper, we explore both the motivation (i.e., why people process choice information the way they do) and the choice-processing strategy (i.e., how people process choice information) underpinning the phenomenon of attraction effect. Our results indicate that in the case of promotion-focused individuals, the desire for a choice that can be easily justified (ease of justification) influences the attraction effect, whereas for prevention-focused individuals, the desire for a choice that maximizes overall utility (overall attractiveness) influences the same effect. Furthermore, promotion-focused people rely on lexicographic-processing strategy, whereas prevention-focused individuals use an equal-weight processing strategy as a means of demonstrating their motivations.

This paper presents the preliminary results of our initial, descriptive, practical, hybrid argumentation model, designed for the use by criminal intelligence analysts (from now on referred to as analysts) working with sophisticated visual analytical software in uncertain sense-making environments. Analysts are required to create exhibits (as evidence) for a court of law or as input for decision-making in intelligence-led policing. These exhibits are required to be accurate, relevant and unbiased. Eight experienced criminal intelligence analysts from West Midlands police and the Belgium police evaluated a low-fidelity prototype resembling the first-order argumentation concepts of our initial argumentation model. The evaluation was to assess the applicability and practicality of the first-order argumentation concepts within our model. The preliminary results presented in this paper indicate that most of the first-order argumentation concepts are both applicable and practical and that the participants would use such concepts to construct their rationale from the onset of an analytical activity, if it were included as part of a software application.