A dual-process model of economic decision making: The symmetric effect of intuitive and cognitive judgments on optimal budget allocation

Understanding the influence of dual-processing system on budget waste resulting from choice inconsistencies is critical in helping individuals maximize decision utility. In two studies we rely on the Generalized Axiom of Revealed Preferences (GARP) to explore the severity of choice inconsistencies resulting from intuitive and cognitive judgments separately, as well as overall severity across the two types of judgments. We focus on choice inconsistency that leads to the inefficient use of individuals’ budget and not on the simple preferences divergence that may result from the two types of judgment. We find that budget waste resulting from intuitive and cognitive judgments is comparable, but that overall budget waste across the two types of judgments is significantly higher. These findings suggest that the inconsistency in choices resulting from intuitive versus cognitive judgments is responsible for significant loss of decision utility in individuals’ economic decisions, rather than choice inconsistencies resulting from a specific type of evaluation in itself. We discuss theoretical and practical implications of our findings.

Jaar van publicatie:2017

BOF-keylabel:ja

IOF-keylabel:ja

BOF-publication weight:0.5

CSS-citation score:1

Authors from:Higher Education

Toegankelijkheid:Open