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Introduction to Judgment and Decision Making

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5 Introduction to Judgment and

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Decision Making
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9 Scott Highhouse, Reeshad S. Dalal,
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and Eduardo Salas
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5 Most introductory chapters begin with a definition of the research area
6 they are summarizing and applying. It seems difficult, however, to come
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up with a definition of judgment and decision making (JDM) research that
is not tautological. We chose, therefore, to borrow (i.e., steal) a definition
from another book on the topic. In Goldstein and Hogarth’s (1997)
excellent book on the trends and controversies in JDM, the authors defined
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1 the psychology of judgment and decision making as the field that

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2 investigates the processes by which people draw conclusions, reach evalua-
3 tions, and make choices. That seems as good as anything we might have
4 come up with. But, there is something sterile and dissatisfying about this
5 definition. It glosses over what Goldstein and Hogarth acknowledged is
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6 the broad and sometimes puzzling nature of a field that contains “a number
7 of schools of thought that identify different issues as interesting and deem
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8 different methods as appropriate” (p. 3).

9 The three editors of this volume, if pressed, will confess to being
30111 influenced by different streams of research and different perspectives on
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1 how JDM should be studied. The first and second editors (Highhouse and
2 Dalal, respectively) identify most with the bounded rationality (Simon,
3 1957) perspective that is best exemplified by the heuristics and biases
4 program of Kahneman, Slovic, and Tversky (1982) and the “everyday
5 irrationality” perspective of Dawes (1988, 2001). These approaches see
6 considerable value in understanding and improving JDM by focusing on
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7 how it may go wrong. This is often done in a decontextualized environment

8 where specific processes may be isolated.
9 Yet, the second editor is also somewhat sympathetic to approaches that
40111 focus on the adaptive nature of heuristics. These perspectives are similar

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2 • Scott Highhouse et al.

in spirit to a long tradition of research on Brunswick’s lens model

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(Hammond, 1955), and are often associated with Gigerenzer (1993) and
his ABC group at the Max Planck Institute. This group is concerned with
“fast and frugal” heuristics that make us smart. These traditions focus on
judgment and decision performance in a contextualized environment, and

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have revealed that some of the biases identified by Kahneman, Tversky
and colleagues (e.g., Kahneman et al., 1982) are attenuated, though not
completely eliminated, when presented in contexts familiar to research

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participants.
The third editor (Salas) takes a radical departure from these perspectives.
He focuses on real world decision making, particularly in crisis situations.
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This perspective has its roots in dynamic decision making (Brehmer, 1990)
and naturalistic decision making (Klein, Orasanu, Calderwood, & Zsambok,
1993), and focuses on decisions involving extreme time pressure,
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complexity, expertise, and high stakes. Of the various approaches to
studying judgment and decision making, this approach has arguably made

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the greatest inroads into industrial-organizational (I-O) psychology (Salas,
Rosen, & DiazGranados, in press), perhaps because it emphasizes field
research in occupational contexts—or perhaps because the third editor is
so productive.
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RECOGNITION IN PSYCHOLOGY
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Whereas the field of industrial-organizational psychology has been around

for over 100 years, the psychological study of judgment and decision
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making is considerably younger. Table 1.1 shows a timeline of important

milestones in the JDM field. Although some might quibble with an
inclusion here or an exclusion there, most scholars of JDM would agree
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that this table captures the important events that have shaped the field. As
the timeline shows, early research in this area was stimulated by important
contributions in the 1950s, especially the piece by Ward Edwards, who is
widely recognized as the founder of behavioral decision theory. Edwards
introduced the expected utility model to psychologists, and challenged them
to consider whether decision makers actually behaved this way.
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With the normative model as a standard against which decision making

can be compared, the field of JDM has enjoyed an enormously fruitful
youth. Studies over the 1960s, 1970s, and 1980s drew from economics,
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Introduction to JDM • 3

1111 TABLE 1.1

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2 Important Milestones in the History of Judgment and Decision Making (JDM)
3 1950s • Ward Edwards (1954) defines the domain of JDM in a classic 1954 Psychological
4 Bulletin article
5 • Paul Meehl (1954) publishes the classic Clinical Versus Statistical Prediction
• Kenneth Hammond (1955) applies Egon Brunswik’s lens model to clinical

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6
prediction
7 • Herbert Simon (1955) introduces the concept of “bounded rationality”
8 • Luce and Raiffa (1957) publishes Games and Decisions

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9 • Leon Festinger (1957) presents the theory of cognitive dissonance
1011 1960s • Ellsberg paradox (1961) stimulates interest in psychology of ambiguity
1 • Allen Parducci (1966) introduces range-frequency theory
2
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4
O • James Stoner (1968) introduces the risky shift phenomenon (the initial impetus
for the broader group polarization phenomenon) in group decision making
• Amos Tversky (1969) publishes “Intransitivity in preferences”
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1970s • Barry Staw (1976) introduces escalation of commitment
5 • Janis and Mann (1977) publish Decision Making
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1980s •
•
•
Kahneman and Tversky (1979) introduce prospect theory
Robyn Dawes (1979) publishes the “The robust beauty of improper linear
models”
First JDM meeting is held in 1980
Richard Thaler (1980) introduces mental accounting
Nisbett and Ross (1980) publish a classic book on social inference
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1 • Norman Anderson (1981) introduces information integration theory

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2 • Kahneman, Slovic, and Tversky (1982) publish the classic Judgment Under
3 Uncertainty: Heuristics and Biases
• Naylor (1985) changes the name of his journal to Organizational Behavior and
4
Human Decision Processes
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• Society for Judgment and Decision Making (SJDM; www.sjdm.org) is established

6 in 1986
7 • Calderwood, Crandell, and Klein (1987) define the field of naturalistic decision
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8 making
• Journal of Behavioral Decision Making introduced in 1988
9 • Robyn Dawes (1988) publishes first edition of Rational Choice in an Uncertain
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1 1990s • Gerd Gigerenzer (1991) challenges heuristics and biases paradigm

2 • Max Bazerman (1991) publishes first edition of Judgment in Managerial Decision
3 Making
• Tetlock (1991) introduces “people as politicians” perspective on JDM
4
• Shafir, Simonson, and Tversky (1993) introduce reason-based choice
5 • Klein, Orasanu, Calderwood, & Zsambok (1993) publish Decision Making in
6 Action
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7 • Scott and Bruce (1995) publish a measure of decision-making styles

8 2000s • Daniel Kahneman wins Nobel Prize in Economics in 2002
9 • SJDM open-access journal Judgment and Decision Making introduced in 2006
• Blackwell Handbook of Judgment and Decision Making published in 2007
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4 • Scott Highhouse et al.

psychophysics, social psychology, and elsewhere to identify a profusion of

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shortcomings associated with everyday judgment and decision making. The
list of cognitive biases includes ambiguity aversion, anchoring and
adjustment, availability, base rate neglect, certainty effect, confirmation
trap, conjunction fallacy, decoy effect, denominator neglect, dilution in

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prediction, duration neglect, endowment, evaluability weighting, focusing
effect, framing effect, gambler’s fallacy, hindsight, honoring sunk costs,
illusion of validity, illusory correlation, loss aversion, omission, outcome

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prejudice, overconfidence, phantom effect, planning fallacy, probability
neglect, pseudodiagnosticity, representativeness, small-sample error, status
quo effect, subadditivity, temporal discounting, and probably more.
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Moreover, explaining these phenomena to the general public has
resulted in best-selling books by prominent JDM scholars (see Table 1.2).
The success of these endeavors shows that: (a) JDM has permeated
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popular culture and our everyday language, and (b) JDM topics have
considerable relevance to everyday life, including life at work. The applied

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relevance of JDM research is one reason that authors have seen considerable
potential for it to inform research and practice in I-O psychology and
related fields (Dalal et al., 2010; Moore & Flynn, 2008; Rosen, Shuffler, &
Salas, 2010).
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TABLE 1.2
Judgment and Decision Making (JDM) Scholars with Popular Press Books
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Title Author(s) Affiliation

Predictably Irrational Dan Ariely Duke

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Switch Chip Heath and Dan Stanford and Duke

Heath
Nudge Richard Thaler and University of Chicago
Cass Sunstein
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Thinking, Fast and Slow Daniel Kahneman Princeton

Expert Political Judgment Philip Tetlock University of Pennsylvania
The Power of Intuition Gary Klein Applied Research
Associates
The Art of Choosing Sheena Iyengar Columbia
The Paradox of Choice Barry Schwartz Swarthmore College
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Gut Feelings Gerd Gigerenzer Max Planck Institute

How We Know What Thomas Gilovich Cornell
Isn’t So
Everyday Irrationality Robyn Dawes Carnegie Mellon
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Introduction to JDM • 5

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2 RELEVANCE TO WORKPLACE JUDGMENTS AND
3 DECISIONS
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As Dalal and Brooks (this volume) note, much of what happens in the
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workplace can ultimately be reduced to judgments and decisions made by

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individuals acting alone or in collectives (such as teams). Indeed, the topics
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covered in this book (performance appraisal, employee selection, job
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choice, goal setting and striving, and leadership, to name just a few) are,
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at heart, specific kinds of judgments or decisions. Yet, organizational
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researchers have not really studied decisions as decisions. Nor have JDM
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researchers paid much attention to the workplace. Given the outsized
importance of work, and working, to human existence and dignity (Hulin,
2002), these omissions seem inexplicable. In the remainder of this section,
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we introduce organizational researchers to aspects of the field of JDM that
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are likely to make cross-fertilization more challenging but also, ultimately,
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more fruitful.
Moore and Flynn (2008; see also Dalal et al., 2010) argued that the use
of a normative benchmark, a defining feature of JDM research, has allowed
the field to prosper. They suggest that researchers of organizational
behavior would do well to adopt a similar approach. By recognizing things
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that should govern judgments and decisions in the workplace, organi-
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zational researchers could examine how actual judgments and decisions
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systematically deviate from these principles (rather than deviating based
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on random error; see Dawes, 1998). When choosing among finalists for
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a job, for example, the characteristics of a person you are no longer

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considering should not affect your preference between two remaining
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finalists. There is very strong evidence, however, that irrelevant candidates

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will systematically affect preference among relevant ones (Highhouse,
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1996; Highhouse & Johnson, 1996). Understanding that this may occur
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allows us to debias the decision-making environment in hopes of
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1
preventing it from happening in high-stakes settings (Arkes, 1991).
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Some have argued that traditional JDM has limited relevance to
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organizational research because it uses a paradigm that is incompatible with
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making applied inferences. Staw (2010, p. 411), for example, noted:
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In its search for parsimonious cause-effect relationships, JDM research often
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misses (or willfully avoids) many of the most crucial elements of work
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behavior, making judgment and decision research less interesting and
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relevant to organizational researchers.
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6 • Scott Highhouse et al.

The issue of whether the low-fidelity experimental approach can be

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reconciled with common field approaches such as passive observation is
extremely complicated (see Borsboom et al., 2009), and we will not tackle
it here. We do agree with Staw (2010) that realistic (yet relatively controlled)
techniques such as the managerial “in-basket” could be profitably used to

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systematically study decision making in the workplace (see also Byham,
2010).
Another common criticism of traditional JDM research is that it creates

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a caricature of the decision maker, and has become preoccupied with
identifying new kinds of errors and mistakes. Kahneman (1991, p. 144)
defended the JDM focus on deviations from rationality by noting that:
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Memory is understood by investigating forgetting, and visual illusions
contribute to the understanding of visual constancies. In the present context,
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the heuristics of judgment and choice are identified by the biases they tend
to produce.

TRKahneman noted that the advantage of using a normative standard is

that it avoids the pitfalls of tearing down competing theoretical positions.
The normative standard is immune to destruction because it is not based
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on behavioral observations. According to Moore and Flynn (2008) JDM

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research “thrives in the productive tension between what is and what ought
to be” (p. 420, italics in original).
As we noted earlier, naturalistic decision making (NDM) has prospered
within I-O psychology. This has especially occurred in the team literature,
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where concern is focused on sensemaking in coordinated environments.

The NDM approach also emphasizes expertise, and the study of experts.
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According to Rosen et al. (2010) experts provide “naturally occurring

models of how effective decisions can be made in complex and demanding
situations” (p. 439). This perspective has not received adequate attention
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in I-O psychology or in traditional JDM (cf., Shanteau, 1992).

The NDM approach, however, is not immune to criticism. Connolly and
Ordóñez (2003, p. 509) observed about research approaches used in this
area:

The tasks themselves are quite complex, even if they are greatly
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oversimplified versions of real-world analogs. Amateur subjects are thus

easily overwhelmed, whereas expert subjects object to the unreality of the
tasks. Findings thus tend to be task specific and difficult to aggregate over
different studies.
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Introduction to JDM • 7

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2 Rosen, & DiazGranados, 2010), it is treated with considerable trepidation
3 within behavioral decision research (Camerer & Johnson, 1991) and within
4 I-O (Highhouse, 2008). Clearly, collaboration among these different
5 perspectives could help us understand the boundary conditions on expertise

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6 and intuition.
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OVERVIEW
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The purpose of this edited volume is to provide research-based perspectives
from JDM on traditional areas of interest to I-O psychologists. Our goal
was to bring together excellent scholars who have one foot planted in JDM
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5 and another in I-O psychology (or a related discipline) and have them
6 imagine how specific areas within I-O psychology could benefit from the
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application of ideas from JDM. The first section of the book is on personnel
decision making, and examines the application of traditional JDM research
to topics including performance evaluation, management development,
employee selection, individual differences, and job choice. The second
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1 section of the book applies traditional JDM research and theory to topics
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2 typically associated with organizational psychology, including goal setting,
3 leadership, compensation, and integrated judgments. This section also
4 includes an NDM approach to studying team decision making. Finally, the
5 third section focuses on decision making in action, and examines NDM
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6 approaches to decision under stress, expertise, and training. It also includes

7 a chapter on how I-O psychologists have typically gone about assessing
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8 decision-making competence in managers. Overall, this book provides a

9 timely application of JDM to I-O topics by scholars doing cutting-edge
30111 work in the field. We believe this volume will contribute meaningfully to
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1 the literature by articulating new and valuable perspectives on important

2 I-O topics.
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4
5
6
REFERENCES
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8 Arkes, H.R. (1991). Costs and benefits of judgment errors: Implications for debiasing.
Psychological Bulletin, 110, 486–498.
9
Borsboom, D., Kievit, R.T., Cervone, D., and Hood, B. (2009). The two disciplines of
40111 scientific psychology, or: The disunity of psychology as a working hypothesis. In

7
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J. Valsiner, P. Molenaar, M. Lyra, and N. Chaudhary (Eds.) Dynamic Process

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Methodology in the Social and Developmental Sciences (Chapter 4). New York:
Springer Science and Business Media.
Brehmer, B. (1990). Strategies in real-time, dynamic decision making. In R.M. Hogarth
(Ed.) Insights in Decision Making: A Tribute to Hillel J. Einhorn. Chicago, IL:
University of Chicago Press.
Byham, W.C. (2010). Assessment centers are an excellent way of studying decision making.

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Industrial and Organizational Psychology, 3, 443–444.
Camerer, C.F. and Johnson, E.J. (1991). The process-performance paradox in expert
judgment: How can experts know so much and predict so badly? In K.A. Ericsson

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and J. Smith (Eds.) Toward a General Theory of Expertise: Prospects and Limits (pp.
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Connolly, T. and Ordóñez, L. (2003). Judgment and decision making. In W.C. Borman,

O D.R. Ilgen, and R.J. Klimoski (Eds.) Handbook of Psychology (vol. 12, pp. 493–518).
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Dalal, R.S., Bonaccio, S., Highhouse, S., Ilgen, D.R., Mohammed, S., and Slaughter, J.E. (2010;
focal article). What if industrial-organizational psychology decided to take workplace
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decisions seriously? Industrial and Organizational Psychology, 3, 386–405.
Dawes, R.M. (1988). Rational Choice in an Uncertain World. San Diego, CA: Harcourt Brace

TR Jovanovich.
Dawes, R.M. (1998). Behavioral decision making and judgment. In D.T. Gilbert and S.T.
Fiske (Eds.) The Handbook of Social Psychology (4th ed., vol. 2, pp. 497–548). Boston,
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Dawes, R.M. (2001). Everyday Irrationality. Boulder, CO: Westview Press.
Gigerenzer, G. (1993). The bounded rationality of probabilistic mental models. In K.I.
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Manktelow and D.E. Over (Eds.) Rationality: Psychological and Philosophical

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Hammond, K.R. (1955). Probabilistic functionalism and the clinical method. Psychological
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Review, 62, 255–262.

Highhouse, S. (1996). Context-dependent selection: The effects of decoy and phantom job
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Highhouse, S. (2008). Stubborn reliance on intuition and subjectivity in employee selection.

Industrial and Organizational Psychology, 1, 333–342.
Highhouse, S. and Johnson, M. (1996). Gain/loss asymmetry and riskless choice: Loss
aversion in choices among job finalists. Organizational Behavior and Human Decision
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Processes, 68, 225–233.

Hulin, C.L. (2002). Lessons from industrial and organizational psychology. In J.M. Brett
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Kahneman, D. (1991). Judgment and decision making: A personal view. Psychological
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Kahneman, D., Slovic, P., and Tversky, A. (1982). Judgment under Uncertainty: Heuristics
and Biases. Cambridge: Cambridge University Press.
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Klein, G.A., Orasanu, J., Calderwood, R., and Zsambok, C.E. (Eds.). (1993). Decision Making
in Action: Models and Methods. Norwood, NJ: Ablex Publishing Corporation.
Moore, D.A. and Flynn, F.J. (2008). The case for behavioral decision research in
organizational behavior. Academy of Management Annals, 2, 399–431.
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1111 Rosen, M.A., Shuffler, M., and Salas, E. (2010). How experts make decisions: Beyond the

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2 JDM paradigm. Industrial and Organizational Psychology, 3, 438–442.
Salas, E., Rosen, M.A., and DiazGranados, D. (2010). Expertise-based intuition and decision
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4 Salas, E., Rosen, M.A., and DiazGranados, D. (in press). Naturalistic decision making in
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Organizational Psychology. New York: Oxford University Press.

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Shanteau, J. (1992). Competence in experts: The role of task characteristics. Organizational
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1011 Staw, B.M. (2010). The trouble with JDM: Some limitations to the influence of JDM on
organizational research. Industrial and Organizational Psychology, 3, 411–416.
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