Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107348
Authors: 
Sahm, Marco
von Weizsäcker, Robert K.
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 5134
Abstract: 
We study the influence of reason and intuition on decision making over time. Facing a sequence of similar problems, agents can either decide rationally according to expected utility theory or intuitively according to case-based decision theory. Rational decisions are more precise but create higher costs, though these costs may decrease over time. We find that intuition will outperform reason in the long run if individuals are sufficiently ambitious. Moreover, intuitive decisions are prevalent in early and late stages of a learning process, whereas reason governs decisions in intermediate stages. Examples range from playing behavior in games like Chess to professional decisions during a manager's career.
Subjects: 
expected utility theory
case-based decision theory
cognitive costs
learning
JEL: 
D81
D83
C63
Document Type: 
Working Paper

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