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Cognitive abilities and superior decision making under risk: A protocol analysis and process model evaluation

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Listed:
  • Edward T. Cokely
  • Colleen M. Kelley

Abstract

Individual differences in cognitive abilities and skills can predict normatively superior and logically consistent judgments and decisions. The current experiment investigates the processes that mediate individual differences in risky choices. We assessed working memory span, numeracy, and cognitive impulsivity and conducted a protocol analysis to trace variations in conscious deliberative processes. People higher in cognitive abilities made more choices consistent with expected values; however, expected-value choices rarely resulted from expected-value calculations. Instead, the cognitive ability and choice relationship was mediated by the number of simple considerations made during decision making --- e.g., transforming probabilities and considering the relative size of gains. Results imply that, even in simple lotteries, superior risky decisions associated with cognitive abilities and controlled cognition can reflect metacognitive dynamics and elaborative heuristic search processes, rather than normative calculations. Modes of cognitive control (e.g., dual process dynamics) and implications for process models of risky decision-making (e.g., priority heuristic) are discussed.

Suggested Citation

  • Edward T. Cokely & Colleen M. Kelley, 2009. "Cognitive abilities and superior decision making under risk: A protocol analysis and process model evaluation," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(1), pages 20-33, February.
  • Handle: RePEc:jdm:journl:v:4:y:2009:i:1:p:20-33
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    References listed on IDEAS

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    1. Fasolo, Barbara & Misuraca, Raffaella & McClelland, Gary H., 2003. "Individual differences in adaptive choice strategies," Research in Economics, Elsevier, vol. 57(3), pages 219-233, September.
    2. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    3. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
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    Citations

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    Cited by:

    1. Allred, Sarah & Duffy, Sean & Smith, John, 2016. "Cognitive load and strategic sophistication," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 162-178.
    2. Dustin P. Calvillo & Jessica N. Burgeno, 2015. "Cognitive reflection predicts the acceptance of unfair ultimatum game offers," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 10(4), pages 332-341, July.
    3. Estrada-Mejia, Catalina & de Vries, Marieke & Zeelenberg, Marcel, 2016. "Numeracy and wealth," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 53-63.
    4. Brent Moritz & Enno Siemsen & Mirko Kremer, 2014. "Judgmental Forecasting: Cognitive Reflection and Decision Speed," Production and Operations Management, Production and Operations Management Society, vol. 23(7), pages 1146-1160, July.
    5. repec:ebl:ecbull:eb-17-00124 is not listed on IDEAS
    6. André Mata & Tiago Almeida, 2014. "Using metacognitive cues to infer others' thinking," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 9(4), pages 349-359, July.
    7. Nina Horstmann & Andrea Ahlgrimm & Andreas Glöckner, 2009. "How distinct are intuition and deliberation? An eye-tracking analysis of instruction-induced decision modes," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(5), pages 335-354, August.
    8. repec:spr:jesaex:v:3:y:2017:i:2:d:10.1007_s40881-016-0032-8 is not listed on IDEAS
    9. Taylor, Matthew P., 2016. "Are high-ability individuals really more tolerant of risk? A test of the relationship between risk aversion and cognitive ability," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 136-147.
    10. Mark Schneider, 2016. "Dual Process Utility Theory: A Model of Decisions Under Risk and Over Time," Working Papers 16-23, Chapman University, Economic Science Institute.
    11. Juan M. Benito-Ostolaza & Penélope Hernández & Juan A. Sanchis-Llopis, 2015. "Are individuals with higher cognitive ability expected to play more strategically?," Working Papers 1507, Department of Applied Economics II, Universidad de Valencia.
    12. Jonathan Corbin & Todd McElroy & Cassie Black, 2010. "Memory reflected in our decisions: Higher working memory capacity predicts greater bias in risky choice," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 5(2), pages 110-115, April.
    13. Chen, Chia-Ching & Chiu, I-Ming & Smith, John & Yamada, Tetsuji, 2013. "Too smart to be selfish? Measures of cognitive ability, social preferences, and consistency," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 112-122.
    14. Riege, Anine H. & Teigen, Karl Halvor, 2013. "Additivity neglect in probability estimates: Effects of numeracy and response format," Organizational Behavior and Human Decision Processes, Elsevier, vol. 121(1), pages 41-52.
    15. Antoni Bosch-Domènech & Pablo Brañas-Garza & Antonio M. Espín, 2013. "Fetal testosterone (2D:4D) as predictor of cognitive reflection," Economics Working Papers 1371, Department of Economics and Business, Universitat Pompeu Fabra.
    16. Nathaniel J. S. Ashby, 2017. "Numeracy predicts preference consistency: Deliberative search heuristics increase choice consistency for choices from description and experience," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 12(2), pages 128-139, March.
    17. Prokosheva, Sasha, 2016. "Comparing decisions under compound risk and ambiguity: The importance of cognitive skills," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 94-105.
    18. Benito-Ostolaza, Juan M. & Hernández, Penélope & Sanchis-Llopis, Juan A., 2016. "Do individuals with higher cognitive ability play more strategically?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 5-11.
    19. Antoni Bosch-Domènech & Pablo Brañas-Garza & Antonio M. Espín, 2013. "Fetal testosterone (2D:4D) as predictor of cognitive reflection," Economics Working Papers 1371, Department of Economics and Business, Universitat Pompeu Fabra.
    20. Brice Corgnet & Mark DeSantis & David Porter, 2015. "Revisiting Information Aggregation in Asset Markets: Reflective Learning & Market Efficiency," Working Papers 15-15, Chapman University, Economic Science Institute.
    21. Philip W. S. Newall, 2016. "Downside financial risk is misunderstood," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(5), pages 416-423, September.
    22. Masini, Andrea & Menichetti, Emanuela, 2013. "Investment decisions in the renewable energy sector: An analysis of non-financial drivers," Technological Forecasting and Social Change, Elsevier, vol. 80(3), pages 510-524.
    23. Keela S. Thomson & Daniel M. Oppenheimer, 2016. "Investigating an alternate form of the cognitive reflection test," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(1), pages 99-113, January.
    24. repec:gam:jadmsc:v:8:y:2018:i:2:p:11-:d:140080 is not listed on IDEAS

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