Thinking, Fast and Slow (61 page)

the frivolous claim
: Chris Guthrie, “Framing Frivolous Litigation: A Psychological Theory,”
University of Chicago Law Review
67 (2000): 163–216.

30: Rare Events

wish to avoid it
: George F. Loewenstein, Elke U. Weber, Christopher K. Hsee, and Ned Welch, “Risk as Feelings,”
Psychological Bulletin
127 (2001): 267–86.

vividness in decision making
: Ibid. Cass R. Sunstein, “Probability Neglect: Emotions, Worst Cases, and Law,”
Yale Law Journal
112 (2002): 61–107. See notes to chapter 13: Damasio,
Descartes’ Error
. Slovic, Finucane, Peters, and MacGregor, “The {r, n>: C. A Affect Heuristic.”

Amos’s student
: Craig R. Fox, “Strength of Evidence, Judged Probability, and Choice Under Uncertainty,”
Cognitive Psychology
38 (1999): 167–89.

focal event and its
: Judgments of the probabilities of an event and its complement do not always add up to 100%. When people are asked about a topic they know very little about (“What is your probability that the temperature in Bangkok will exceed 100° tomorrow at noon?”), the judged probabilities of the event and its complement add up to less than 100%.

receiving a dozen roses
: In cumulative prospect theory, decision weights for gains and losses are not assumed to be equal, as they were in the original version of prospect theory that I describe.

superficial processing
: The question about the two urns was invented by Dale T. Miller, William Turnbull, and Cathy McFarland, “When a Coincidence Is Suspicious: The Role of Mental Simulation,”
Journal of Personality and Social Psychology
57 (1989): 581–89. Seymour Epstein and his colleagues argued for an interpretation of it in terms of two systems: Lee A. Kirkpatrick and Seymour Epstein, “Cognitive-Experiential Self-Theory and Subjective Probability: Evidence for Two Conceptual Systems,”
Journal of Personality and Social Psychology
63 (1992): 534–44.

judged it as more dangerous
: Kimihiko Yamagishi, “When a 12.86% Mortality Is More Dangerous Than 24.14%: Implications for Risk Communication,”
Applied Cognitive Psychology
11 (1997): 495–506.

forensic psychologists
: Slovic, Monahan, and MacGregor, “Violence Risk Assessment and Risk Communication.”

“1 of 1,000 capital cases”
: Jonathan J. Koehler, “When Are People Persuaded by DNA Match Statistics?”
Law and Human Behavior
25 (2001): 493–513.

studies of
choice from experience: Ralph Hertwig, Greg Barron, Elke U. Weber, and Ido Erev, “Decisions from Experience and the Effect of Rare Events in Risky Choice,”
Psychological Science
15 (2004): 534–39. Ralph Hertwig and Ido Erev, “The Description-Experience Gap in Risky Choice,”
Trends in Cognitive Sciences
13 (2009): 517–23.

not yet settled
: Liat Hadar and Craig R. Fox, “Information Asymmetry in Decision from Description Versus Decision from Experience,”
Judgment and Decision Making
4 (2009): 317–25.

“chances of rare events”
: Hertwig and Erev, “The Description-Experience Gap.”

31: Risk Policies

inferior option BC
: The calculation is straightforward. Each of the two combinations consists of a sure thing and a gamble. Add the sure thing to both options of the gamble and you will find AD and BC.

the equivalent of “locking in”
: Thomas Langer and Martin Weber, “Myopic Prospect Theory vs. Myopic Loss Aversion: How General Is the Phenomenon?”
Journal of E {>Joenon?&conomic Behavior & Organization
56 (2005): 25–38.

32: Keeping Score

drive into a blizzard
: The intuition was confirmed in a field experiment in which a random selection of students who purchased season tickets to the university theater received their tickets at a much reduced price. A follow-up of attendance revealed that students who had paid the full price for their tickets were more likely to attend, especially during the first half of the season. Missing a show one has paid for involves the unpleasant experience of closing an account in the red. Arkes and Blumer, “The Psychology of Sunk Costs.”

the
disposition effect: Hersh Shefrin and Meir Statman, “The Disposition to Sell Winners Too Early and Ride Losers Too Long: Theory and Evidence,”
Journal of Finance
40 (1985): 777–90. Terrance Odean, “Are Investors Reluctant to Realize Their Losses?”
Journal of Finance
53 (1998): 1775–98.

less susceptible
: Ravi Dhar and Ning Zhu, “Up Close and Personal: Investor Sophistication and the Disposition Effect,”
Management Science
52 (2006): 726–40.

fallacy can be overcome
: Darrin R. Lehman, Richard O. Lempert, and Richard E. Nisbett, “The Effects of Graduate Training on Reasoning: Formal Discipline and Thinking about Everyday-Life Events,”
American Psychologist
43 (1988): 431–42.

“a sinking feeling”
: Marcel Zeelenberg and Rik Pieters, “A Theory of Regret Regulation 1.0,”
Journal of Consumer Psychology
17 (2007): 3–18.

regret to normality
: Kahneman and Miller, “Norm Theory.”

habitually taking unreasonable risks
: The hitchhiker question was inspired by a famous example discussed by the legal philosophers Hart and Honoré: “A woman married to a man who suffers from an ulcerated condition of the stomach might identify eating parsnips as the cause of his indigestion. The doctor might identify the ulcerated condition as the cause and the meal as a mere occasion.” Unusual events call for causal explanations and also evoke counterfactual thoughts, and the two are closely related. The same event can be compared to either a personal norm or the norm of other people, leading to different counterfactuals, different causal attributions, and different emotions (regret or blame): Herbert L. A. Hart and Tony Honoré,
Causation in the Law
(New York: Oxford University Press, 1985), 33.

remarkably uniform
: Daniel Kahneman and Amos Tversky, “The Simulation Heuristic,” in
Judgment Under Uncertainty
:
Heuristics and Biases
, ed. Daniel Kahneman, Paul Slovic, and Amos Tversky (New York: Cambridge University Press, 1982), 160–73.

applies to blame
: Janet Landman, “Regret and Elation Following Action and Inaction: Affective Responses to Positive Versus Negative Outcomes,”
Personality and Social Psychology Bulletin
13 (1987): 524–36. Faith Gleicher et al., “The Role of Counterfactual Thinking in Judgment of Affect,”
Personality and Social Psychology Bulletin
16 (1990): 284–95.

actions that deviate from the default
: Dale T. Miller and Brian R. Taylor, “Counterfactual Thought, Regret, and Superstition: How to Avoid Kicking Yourself,” in
What Might Have Been: The Social Psychology of Counterfactual Thinking
, ed. Neal J. Roese and James M. Olson (Hillsdale, NJ: Erlbaum, 1995), 305–31.

produce blame and regret
: Marcel Zeelenberg, Kees van den Bos, Eric van Dijk, and Rik Pieters, “The Inaction Effect in the Psychology of Regret,”
Journal of Personality and Social Psychology
82 (2002): 314–27.

brand names over generics
: Itamar Simonson, “The Influence of Anticipating Regret and Responsibility on Purchase Decisions,”
Journal of Consumer Research
19 (1992): 105–18.

clean up their portfolios
: Lilian Ng and Qinghai Wang, “Institutional Trading and the Turn-of-the-Year Effect,”
Journal of Financial Economics
74 (2004): 343–66.

loss averse for aspects of your life
: Tversky and Kahneman, “Loss Aversion in Riskless Choice.” Eric J. Johnson, Simon Gächter, and Andreas Herrmann, “Exploring the Nature of Loss Aversion,”
Centre for Decision Research and Experimental Economics, University of Nottingham, Discussion Paper Series
, 2006. Edward J. McCaffery, Daniel Kahneman, and Matthew L. Spitzer, “Framing the Jury: Cognitive Perspectives on Pain and Suffering,”
Virginia Law Review
81 (1995): 1341–420.

classic on consumer behavior
: Richard H. Thaler, “Toward a Positive Theory of Consumer Choice,”
Journal of Economic Behavior and Organization
39 (1980): 36–90.

taboo tradeoff: Philip E. Tetlock et al., “The Psychology of the Unthinkable: Taboo Trade-Offs, Forbidden Base Rates, and Heretical Counterfactuals,”
Journal of Personality and Social Psychology
78 (2000): 853–70.

where the precautionary principle
: Cass R. Sunstein,
The Laws of Fear: Beyond the Precautionary Principle
(New York: Cambridge University Press, 2005).

“psychological immune system”
: Daniel T. Gilbert et al., “Looking Forward to Looking Backward: The Misprediction of Regret,”
Psychological Science
15 (2004): 346–50.

33: Reversals

in the man’s regular store
: Dale T. Miller and Cathy McFarland, “Counterfactual Thinking and Victim Compensation: A Test of Norm Theory,”
Personality and Social Psychology Bulletin
12 (1986): 513–19.

reversals of judgment and choice
: The first step toward the current interpretation was taken by Max H. Bazerman, George F. Loewenstein, and Sally B. White, “Reversals of Preference in Allocation Decisions: Judging Alternatives Versus Judging Among Alternatives,”
Administrative Science Quarterly
37 (1992): 220–40. Christopher Hsee introduced the terminology of joint and separate evaluation, and formulated the important evaluability hypothesis, which explains reversals by the idea that some attributes {e a#822become evaluable only in joint evaluation: “Attribute Evaluability: Its Implications for Joint-Separate Evaluation Reversals and Beyond,” in Kahneman and Tversky,
Choices, Values, and Frames
.

conversation between psychologists and economists
: Sarah Lichtenstein and Paul Slovic, “Reversals of Preference Between Bids and Choices in Gambling Decisions,”
Journal of Experimental Psychology
89 (1971): 46–55. A similar result was obtained independently by Harold R. Lindman, “Inconsistent Preferences Among Gambles,”
Journal of Experimental Psychology
89 (1971): 390–97.

bewildered participant
: For a transcript of the famous interview, see Sarah Lichtenstein and Paul Slovic, eds.,
The Construction of Preference
(New York: Cambridge University Press, 2006).

the prestigious
American Economic Review: David M. Grether and Charles R. Plott, “Economic Theory of Choice and the Preference Reversals Phenomenon,”
American Economic Review
69 (1979): 623–28.

“context in which the choices are made”
: Lichtenstein and Slovic,
The Construction of Preference
, 96.

one embarrassing finding
: Kuhn famously argued that the same is true of physical sciences as well: Thomas S. Kuhn, “The Function of Measurement in Modern Physical Science,”
Isis
52 (1961): 161–93.

liking of dolphins
: There is evidence that questions about the emotional appeal of species and the willingness to contribute to their protection yield the same rankings: Daniel Kahneman and Ilana Ritov, “Determinants of Stated Willingness to Pay for Public Goods: A Study in the Headline Method,”
Journal of Risk and Uncertainty
9 (1994): 5–38.

superior on this attribute
: Hsee, “Attribute Evaluability.”

“requisite record-keeping”
: Cass R. Sunstein, Daniel Kahneman, David Schkade, and Ilana Ritov, “Predictably Incoherent Judgments,”
Stanford Law Review
54 (2002): 1190.

34: Frames and Reality

unjustified influences of formulation
: Amos Tversky and Daniel Kahneman, “The Framing of Decisions and the Psychology of Choice,”
Science
211 (1981): 453–58.

paid with cash or on credit
: Thaler, “Toward a Positive Theory of Consumer Choice.”

10% mortality is frightening
: Barbara McNeil, Stephen G. Pauker, Harold C. Sox Jr., and Amos Tversky, “On the Elicitation of Preferences for Alternative Therapies,”
New England Journal of Medicine
306 (1982): 1259–62.

“Asian disease problem”
: Some people have commented that the “Asian” label is unnecessary and pejorative. We probably would not use it today, but the example was written in the 1970s, when sensitivity to group labels was less developed than it is today. The word was added to make the example more concrete by reminding respondents of the Asian flu epidem {an s less ic of 1957.