Guided decisions processes

Abstract

The heuristics and bias research program has convincingly demonstrated that our judgments and choices are prone to systematic errors. Decision analysis requires coherent judgments about beliefs (probabilities) and tastes (utilities), and a rational procedure to combine them so that choices maximize subjective expected utility. A guided decision process is a middle-of-the-road between decision analysis and intuitive judgments in which the emphasis is on improving decisions through simple decision rules. These rules reduce cost of thinking, or decision effort, for the myriad decisions that one faces in daily life; but at the same time, they are personalized to the individual and produce near optimal choices. We discuss the principles behind the guided decision processes research program, and illustrate the approach using several examples.