Does smart mean rational? A study of cognitive dispositions, heuristics and rationality

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Volume Title

School of Business | Master's thesis

Date

2016

Major/Subject

Kansantaloustiede
Economics

Mcode

Degree programme

Language

en

Pages

67

Series

Abstract

Human decision making is systematically less-than-fully rational and partly unconscious. Importantly, people's decisions deviate from the recommendations by "standard" economics in somewhat predictable ways, while some people are more prone to commit bias than others. Lately, there has been efforts to identify characteristics that can be used to predicts one's susceptibility to bias. This thesis studies the effects of cognitive characteristics of individuals on classical heuristics-andbiases tasks. The thesis utilizes data gathered in an online survey that had over 800 participants. Both the Cognitive Reflection Test and Need for Cognition score are found to correlate positively with consistent preferences, risk neutrality and more liberal views on social policy issues. The overlap between biases associated with CRT and NFC is limited, and both measures reliably predict outcomes in several decision making tasks, independent of each other.

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Keywords

Aalto University, Aalto-yliopisto, behavioral economics, käyttäytymisen taloustiede, decision making, päätöksenteko

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