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Lay Rationalism and Inconsistency between Predicted Experience and Decision

Journal of Behavioral Decision Making, Vol. 16, 2003

16 Pages Posted: 11 Oct 2006  

Christopher K. Hsee

University of Chicago - Booth School of Business

Frank Yu

China Europe International Business School

Jiao Zhang

University of Chicago - Booth School of Business

Yiheng Xi

Hong Kong University of Science & Technology (HKUST)

Abstract

Decision-makers are sometimes depicted as impulsive and overly influenced by hot,affective factors. The present research suggests that decision-makers may be too cold and overly focus on rationalistic attributes, such as economic values, quantitative specifications,and functions. In support of this proposition, we find a systematic inconsistency between predicted experience and decision. That is, people are more likely to favor a rationalistically-superior option when they make a decision than when they predict experience. We discuss how this work contributes to research on predicted and decision utilities; we also discuss when decision-makers overweight hot factors and when they overweight cold factors.

Keywords: experienced utility, lay rationalism, rationality, experienced utility, affective forecasting, happiness

JEL Classification: D81, D11, D12, D91

Suggested Citation

Hsee, Christopher K. and Yu, Frank and Zhang, Jiao and Xi, Yiheng, Lay Rationalism and Inconsistency between Predicted Experience and Decision. Journal of Behavioral Decision Making, Vol. 16, 2003. Available at SSRN: https://ssrn.com/abstract=929942

Christopher K. Hsee (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Fang Yu

China Europe International Business School ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Jiao Zhang

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Yiheng Xi

Hong Kong University of Science & Technology (HKUST)

Clearwater Bay
Kowloon, 999999
Hong Kong

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