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A dual system model of preferences under risk
1Decision Sciences, INSEAD, Singapore 138676. kanchan.mukherjee@insead.edu
Psychological Review
|January 13, 2010
Summary
This study introduces a dual system model (DSM) for decision-making under risk. It explains how emotional and rational systems combine values, improving understanding of risk attitudes and decision patterns.
Area of Science:
- Cognitive Psychology
- Behavioral Economics
- Decision Theory
Background:
- Dual process theories suggest distinct emotional and rational cognitive systems.
- Previous research highlights the influence of affect and individual differences on decision-making.
Purpose of the Study:
- To present a comprehensive Dual System Model (DSM) for decision-making under risk and uncertainty.
- To integrate individual differences, affective outcomes, and task construals into a unified framework.
Main Methods:
- Theoretical model development based on dual process theories.
- Integration of empirical findings on decision-making biases and heuristics.
Main Results:
- The DSM explains various decision-making phenomena, including risk attitudes and ambiguity aversion.
- The model accounts for violations of standard economic assumptions like stochastic dominance.
Conclusions:
- The DSM offers a robust framework for understanding complex decision-making processes.
- It predicts conditions influencing specific behavioral patterns in risky choices.
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