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Reason, Intuition, and Time

Author

Listed:
  • Marco Sahm
  • Robert K. von Weizsäcker
  • Robert K. von Weizsäcker

Abstract

We study the influence of reason and intuition on decision making over time. Facing a sequence of similar problems, agents can either decide rationally according to expected utility theory or intuitively according to case-based decision theory. Rational decisions are more precise but create higher costs, though these costs may decrease over time. We find that intuition will outperform reason in the long run if individuals are sufficiently ambitious. Moreover, intuitive decisions are prevalent in early and late stages of a learning process, whereas reason governs decisions in intermediate stages. Examples range from playing behavior in games like Chess to professional decisions during a manager’s career.

Suggested Citation

  • Marco Sahm & Robert K. von Weizsäcker & Robert K. von Weizsäcker, 2014. "Reason, Intuition, and Time," CESifo Working Paper Series 5134, CESifo.
    • Handle: RePEc:ces:ceswps:_5134
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    References listed on IDEAS

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    1. Itzhak Gilboa & David Schmeidler, 1995. "Case-Based Decision Theory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 605-639.
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    6. Frantz, Roger, 2003. "Herbert Simon. Artificial intelligence as a framework for understanding intuition," Journal of Economic Psychology, Elsevier, vol. 24(2), pages 265-277, April.
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    More about this item

    Keywords

    expected utility theory; case-based decision theory; cognitive costs; learning;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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