Center for Behavioral Decision Research

CBDR : Seminar Series : Seminar by Gideon Keren

Heads or Tails: Decisions by a Coin-flip and the Limits of Rationality

	presented by Gideon Keren (Eindhoven University of Technology)


	Thursday, April 3	link to paper
	Noon-1:15
	Porter 223D	link to Speaker's Site

	Abstract:

	Faced with equally attractive options, rational choice theory implicitly prescribes a randomizer (e.g., coin) as a tie breaker. Similarly, when lacking convincing arguments in favor of one option, considerations of fairness (e.g., which patient should receive the life saving kidney) advocate using a randomizer. Contrary to these normative considerations, empirical evidence will be presented demonstrating people’s strong aversion for coin tossing, even when (i) they judge the options as equally (un)attractive, and (ii) observable fairness is desired. Evidently, visibly arbitrary chance procedures are often repulsive. The use of the coin turns to be acceptable only when fairness (actual as well as perceived) is indisputably unattainable. The results are examined in light of different conceptions of rationality, from an economic and psychological perspective. When decision makers assess two or more options to be equally attractive, they are said to be indifferent between the options. To break the tie, one may consider the use of a randomizer (e.g., a coin). Using a coin for deciding between two options that carry the same utility is not incompatible with rational choice theory and with the utilitarian perspective according to which what matters are choices and their corresponding outcomes (regardless of the underlying processes). However, such a procedure is often not acceptable from a descriptive viewpoint. Specifically, decision makers are said to be reason-based (Shafir, Simonson & Tversky, 1993) and coins, apparently, do not offer reasons. From an ethical view point, employing a coin may satisfy considerations of procedural fairness yet coins, unlike human decision makers, do not carry responsibility. From a descriptive viewpoint, how acceptable is the use of a coin for making decisions? We present robust empirical evidence demonstrating that people are only willing to use a randomizer to decide between inconsequential alternatives. Faced with important choices with severe consequences (e.g., who will be the recipient of a kidney transplant) they possess strong aversion for throwing the coin, even though: - They judge the options to be equally (un)attractive, thus demonstrating a choice - judgment incompatibility. - They judge a coin toss to be a fair procedure and observable fairness is desired. In the final discussion, we examine the implications of our empirical results, from both a theoretical and applied viewpoints. Evidently, choice by a random procedure, even when normatively compelling, is often undesirable. People search for dominating reasons to justify a decision, even when such reasons do not exist. In several court cases in the U.S., judges using a coin were reprimanded because the coin flip “offended the society’s commitment to rationality”. People expect judicial rulings to appear to be the product of contemplative, deliberative, cognitive processes. “Rather than accepting the limits of reasons, people prefer the rituals of reasons” (Elster, 1989).

	Host at CMU: Wandi Bruine de Bruin