Individual and Group Decision Making: Current Issues

By N. John Castellan Jr. | Go to book overview

CHAPTER 1
SOME PRACTICAL JUDGMENT AND DECISION-MAKING RESEARCH

Hal R. Arkes Ohio University

"So what?" is a question I wish more people would ask cognitive psychologists. When we describe our latest research findings to interested laypersons, most listeners nod politely. However, they do not feel comfortable asking us the question they are asking themselves, namely, "What practical implications could such esoteric findings possibly have?" I believe that most researchers in the area of judgment and decision making could answer that question quite satisfactorily. But if we are not asked in a blatant way, we have a tendency not to mention the implications of our research. Without waiting for anyone to inquire, I demonstrate how applied this area of research can be. I present three very practical areas of judgment and decision-making research: economics, the hindsight bias, and the "validity effect."


ECONOMICS

The first topic is the psychology of windfall gains, and the "Cathy" cartoon (Fig. 1.1) helps illustrate the principle.

Somehow saving a lot of money at a sale permits one to spend $400 on a parking place, a behavior one would normally not consider rational. The money Cathy saved at the sale is a windfall gain, and there is evidence that such money is treated differently than nonwindfall cash.

What characterizes a windfall gain? Why is it so eminently spendable? Windfall money is unanticipated. It has not already been entered into any

-3-

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