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An Investigation of individual differences in expected utility violations from the dual process perspective

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Individual differences in five different types of expected utility (EU) violations are investigated using thinking orientation, a construct of dual process theories, as the predictor variable. The effect on choice performance of increasing the relative access of one thinking system or the other is also explored. The key findings are: (a) EU violations are independent of rational thinking, (b) experiential thinking correlates positively with the impossibility effect and negatively with ambiguity aversion, (c) increasing access to both systems improves performance for all participants, except those high on both thinking dimensions, (d) greater deliberation does not lead to lower violations, (e) the common consequence effect and certainty effect are positively correlated and the impossibility effect and ambiguity aversion are negatively correlated, and (f) men are more rationally oriented while women are more experientially oriented, women violate EU more than men, and both sexes show maximum improvement when primed on their respective thinking orientations. Results show that individual differences from the dual process perspective can have predictive implications for decision making under risk. An elementary model of dual process thinking is also proposed.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2008/2008-29.pdf

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Copyright INSEAD. All rights reserved