Deciding Analytically or Trusting Your Intuition? The Advantages and Disadvantages of Analytic and Intuitive Thought

Abstract

People can make judgments and choices in two modes - the tacit (or intuitive) and deliberate (or analytic). This chapter examines the conditions under which each system is likely to be more effective. Distinctions are made between types of information typically used as well as the characteristics of environments that affect learning. Experiments that have contrasted "intuitive" and "analytic" modes are reviewed. This leads to specifying the trade-off that characterizes the relative effectiveness of the two modes. Tacit system responses are subject to biases. In deliberate mode, people might not know the "correct rule" to deal with the task and/or make errors in execution. This depends on the analytical complexity of the task. The trade-off is thus characterized by bias (in implicit responses) versus analytical complexity. Although typically ignored, a case is made to improve decision making by educating the contributions of the tacit dimension.

Keywords: Decision making, intutition, analysis, confidence, learning, tacit processes

JEL Classification: M10