Abstract
Many theorists of economic rationality formulated insightful postulates with a lot of common sense, yet human decision-making proved a hard nut to crack. Even the mildest of all principles, weak stochastic transitivity, was—as we saw—proven to be systematically violated. The agents seem to be in so much contradiction with their own preferences, that virtually any attempt at understanding them has ended in frustration. Along the same decades, psychologists had entertained an idea that turned out to be of much help in decoding behaviour, and it was an idea so commonplace, that it could not be attributed to any particular researcher. Simply put, it stated that people approach all problems with one of two different modes of thinking—if the task is very simple, it is tackled swiftly and effortlessly; however, tasks that are more complex demand not only more effort, but activate an altogether different mental machinery.
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Notes
- 1.
“Phenomenological” has different meanings in philosophy, psychology, and the natural sciences. Here I use the term as it is understood in the latter sciences, most often in physics: it qualifies theories and mathematical models that fit empirical data without relating to the deep mechanism of the phenomena.
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Mengov, G. (2015). Prospect Theory—A Milestone. In: Decision Science: A Human-Oriented Perspective. Intelligent Systems Reference Library, vol 89. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-47122-7_3
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