Can Hunches be rational

Abstract

Open any book on judgment and decision making and you will likely encounter two contrasting categories: rational and intuitive judgment. Rational judgment is defined by logical principles, such as the maximization of expected utility, Bayes' rule, or complex statistical prediction techniques. Despite the prevalence of such theories, people fail to adhere to these logical standards and instead rely on intuitive hunches, habits, and heuristics. Books on the subject claim that short-cuts spring from our limited cognitive capacities and knowledge, which results in flawed reasoning and logical blunders. According to this view, mere hunches are inferior to logic and should be avoided unless time constraints and information costs leave no other choice. More information and more computational power, we are told, are always better. These conclusions tend to be presented as self-evident and obvious.