Judgment and

Decision Making
Unit 2: History and Foundations

Prof. Ulrich Hoffrage

Summer 2025
Judgment and Decision Making:
Key Concepts
Changing the world Changing what will happen to you

Decisions Actions
Consequences /
Outcomes
Judgments Events

Subjective Evaluation
(Preferences, Goals)
Assessing the world

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 2

Fortuna Sapientia

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 3

 Taming Chance (Ian Hacking)
Probability theory: Reconciling Scientia with her
arch-rival Fortuna
Aggregating unpredictable single events (Bernoulli
events) yields probability distributions → law of
large numbers
◼ Born: mid 17th century
◼ 18th century: gambling, jurisprudence, data
analysis, inductive inferences and insurances
◼ 19th century: sociology, physics, psychology
◼ 20th century: agronomy, polling, medical testing,
baseball, weather forecasting, …
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 4
 The Start of JDM Research:
The 17th Century and Before
◼ Humans and lower animals have always
made decisions…
◼ Aristotle and others pondered the nature of
problem solving (believed in generality of
form of problems)
◼ Blaise Pascal (1623-1662)
 The problem of points: How to calculate
the expected value of a gamble?
 Pensées sur la religion (1669):
Should you believe in God?

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 5

 The Birth of
Mathematical Probability Theory
◼ 1654: Correspondence between Blaise
Pascal and Pierre Fermat about the
problems of a notorious gambler — of
Chevalier de Méré.
◼ De Méré proposes you the following bet:
We are throwing a fair dice four times. If it
lands on six one or more times, he wins
(1000 Sfr). If no six occurs, you win (1000
Sfr). Should you accept?
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 6
◼ The probability of one six when throwing a fair die
once is 1/6

◼ Hence the probability of “no six” is:

 p(no six) = 5/6

◼ The probability of “no six” in a series of 4 throws is

 p(no six in 4 throws) = (5/6)*(5/6)*(5/6)*(5/6) = .482

◼ Thus the probability is

 p(at least one six in 4 throws) = .518

◼ Therefore, De Méré’s chances to win are higher

than 50%

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 7

 Expected Value Theory

Expected value = ∑(pixi)

◼ EV (your perspective) = (0.518*(-1,000 Sfr)) + (0.482*1,000 Sfr)

= (-518) + 482 = -36

◼ EV (de Mérés’ perspective) = (0.518*(1,000 Sfr)) + (0.482*-1,000 Sfr)

= 518 + (-482) = 36

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 8

 De Méré offers you a second bet:
A pair of dice is thrown 24 times. If at least one double-six occurs, he
wins. If no double-six occurs, you win. Do you accept this bet?

◼ What is the probability of a double-six per throw?

 P(double-six) = 1/36
◼ Hence the probability of “no double-six” is:
 P(no double-six) = 35/36
◼ The probability of “no double-six” in a series of 24 throws is:
 P(no double-six in 24 throws) = (35/36)24 = .509
◼ Thus the probability of at least one double-six in 24 throws is
 P(at least one double-six in 24 throws) = 1-.509 = .491
◼ Therefore: Make the bet!

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 9

 Should You Believe in God?

Changing the world Changing what will happen to you

Decision Actions
(Should I Believe?) (Practice)
Consequences /
(see next slide)
Judgment Event
(Does s/he exist?) (he/she exists)

Subjective Evaluation
(Preferences, Goals)
Assessing the world

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 10

Consequences of Belief in God
S/he exists
(Event)
yes no

Tough life on Tough life on

yes earth, earth,
But: Salvation And: Lost
Belief in God oppertunities
(Decision / Action)
Nice life on Nice life on
no earth, earth,
But: Hell And that was it!

Rational calculus – consequentialist point of view

Even if probabilities are low: They are multiplied with
consequences of infinite value → Ergo: You should believe
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 11
The Evaluation of Consequences
and the St. Petersburg Paradox
◼ A gamble first mentioned in letter (1713) from Nicholaus
Bernoulli to Pierre de Montmort:
◼ An independent person repeatedly tosses a fair coin until it
lands on tails (i.e., Tails -> terminate, Heads –> continue)
◼ Your gain, which I am going to pay, depends on the number of
coin tosses (n):
 with n = 1, you get 2 Sfr
 with n = 2, you get 4 Sfr
 with n = 3, you get 8 Sfr, etc.
n
 Your win is hence 2 Sfr

◼ How much money would you put down on this gamble?

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 12

 Probability of Win (W)
Toss Tail (P) (in SFR) (P*W)
1. 1/2 2 1
2. 1/4 4 1
3. 1/8 8 1
4. 1/16 16 1
5. 1/32 32 1
6. 1/64 64 1
7. 1/128 128 1
8. 1/256 256 1
… … … …
Expected Value
Σ= 1 Σ= ∞
∑=
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 13
 Distribution of your answers
(Qualtrics survey of first session, answers across cohort 2021-2023)

St. Petersburg paradox: How much money would you put down on
this gamble?

2 4 10 100
 Problem:
Nobody does it

Why not?

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 15

 Diminishing Marginal Utility
Utility

U(V+X)
U(V)

U(V-X)

Daniel Bernoulli V-X V V+X Value (money)

(1700-1782)
Commentarii academiae scientiarum imperialis
Petropolitanae (1738): Behavior does not follow the
expected value but the expected utility
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 16
 Psychophysics:
Gustav Theodor Fechner
(1801-1887)

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Weber-Fechner Law

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 18

 Expected Utility Theory
Expected utility = ∑piu(xi)

◼ Utility is a logarithmic function with the form

u(x) = ln(x)
◼ Intuition: A win of, say, 2 Million Sfr does
not necessarily mean 2x as much as a win
of 1 Million Sfr

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 19

 Probability
of Tail
Toss (P) Win (W) (P*W) Utility (U) (P*U)
1. 1/2 2 1 0,69 0,35
2. 1/4 4 1 1,39 0,35
3. 1/8 8 1 2,08 0,26
4. 1/16 16 1 2,77 0,17
5. 1/32 32 1 3,47 0,11
6. 1/64 64 1 4,16 0,06
7. 1/128 128 1 4,85 0,04
8. 1/256 256 1 5,55 0,02
… … … … … …
Expected Value Expected Utility
Σ= 1 Σ= ∞ Σ ≈ 1.4
 4 Sfr
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 20
 The Paradox Is No Paradox
◼ The sum of the expected utility is not unlimited
◼ Reaches a limit at approx. 1.4 utility-units:
ln(x) = 1.4 (x = e1.4 ≈ 4 Sfr)
◼ Therefore: a rational gambler would pay
about 4 Sfr
◼ By using a logarithmic scale, Daniel Bernoulli
considered also the gambler’s fortune

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 21

 Behavior ≠ Norm

Daniel Bernoulli revises

the norm

Mathematical vs. moral value of money

„Mathematicians value money in proportion

to its quantity, commonsense men in
proportion to its use“ (Cramer, 1728)
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 22
Are There Alternative Explanations?

How much can the bank afford to pay?

237 $ = 136 Billion $ (Elon Musk: about 187 Billion $)

Thus, not only the expected utility but the

expected value is finite as well (at least in
practice).

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 23

Utility Curves and Diversification of Risk:
◼ You want to ship some goods overseas
◼ Transaction costs (as well as costs for a ship itself)
are zero
◼ Your utility curve is
 (a) Linear
 (b) Non-linear (concave)
◼ Probability that a ship does arrive is .9
◼ Homework : You have two ships available: Should
you put everything on one ship, or distribute the
goods on both ships? (if the latter: their arrivals are
assumed to be independent events)
◼ Solutions by other students (with my comments) and
correct solution on the next slides (try to solve it
without looking at this slide)
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 24
A Closer Look on the Two Components
(Probabilities and Values)
Evaluation of consequences
objective subjective

objective

Probabilities

subjective

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 32

 Rational Choice Theories

Evaluation of consequences
objective subjective

Expected Expected
objective Value Utility

Probabilities

Subjective Subjective
subjective Expected Expected
Value Utility

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 33

 Interpretations of Probability:
Variants (Sources) of Uncertainty

Uncertainty

External Internal
(objective) (subjective)

Frequency in Subjective
Propensity Reasons
the long run Belief

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 34

 Interpretations of Probability:
Variants (Sources) of Uncertainty
◼ Propensity (objective): Mathematical assumption, built-in feature of
a random generator (e.g., dice, coin)
 E.g., the probability of “tails” when tossing a coin is .5.
 Historical roots: Gambling

◼ Relative frequency in the long run (objective): empirical

observation, statistics
 E.g., the probability that a Swiss male over 65 will die of prostate cancer
= relative frequency of prostate cancer in this reference class
 Richard von Mises: “We shall not speak of probability until a collective
has been defined” (p. 18).
 Historical roots: Mortality statistics

◼ Subjective belief: claims about single events (e.g., Bruno de Finetti)

 E.g., How probable is it that Elvis Presley is still alive?
 Historical roots: Testimonies in court trials

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 35

 Historical Roots of Probability
◼ Propensity: gambling
◼ Frequency: mortality statistics
◼ Subjective belief: testimonies in court trials

Shift in their relationship

▪ Early days of probability theory: mixture (even
considered to be identical – later back-uped by
association theory of British empirists)
▪ Today: clearly separated (again justified with
reference to assocation theory!)
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 36
 The Classical Interpretation
◼ Calculus of chance = calculus of expectations
◼ Degrees of certainties
 Mathematical certainty of demonstration (prove-able)
 Physical certainty of sensory evidence
 Moral certainty based on testimony and conjecture
◼ Clash between Reformation and Counterreformation over
principles of faith and their justification:
 Led to erosion of the domain of demonstrative proof
 And to expansion of probable reasoning
◼ Leipniz & Jacob Bernoulli: new risk analysis
 Introduce continuum rather than three categories (mathematical,
pyhsical and moral)
 Quantify uncertainties to make them comparable

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 37

 Numbers versus qualities:
Influences of probabilistic ideas
beyond probability theory
◼ Determinism ◼ Statistics in 19th century sociology
◼ Free will was paired with strict determinism (on
the level of the collective)
◼ Causality
◼ Explanation ◼ BUT: in 20th century physics it implied
◼ Evidence indeterminism (on the atomic level)
Side node: a-tom (greek) and
◼ Inference in-dividuum (latin) is the same word!

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 38

The 18th Century – Beginnings
◼ 1713; 1738: St. Petersburg paradox (N. Bernoulli
and D. Bernoulli)…you need something beyond
mathematical expectation (i.e., expected value) to
explain people’s decisions in the face of risk
◼ Adam Smith – homo economicus and the invisible
hand: How rational and selfish agents create value
on the macrolevel
◼ The Enlightenment (and the French Revolution)

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 39

 « By pursuing his own
interest [the individual]
promotes that of the society
more effectually than when
he really intends to promote
it. »

Adam Smith, An Inquiry into the

Nature and Causes of the Wealth of
Adam Smith (1723-1790) Nations, 1776

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The Homo Economicus Concept
• Economic actors
– fully rational thinking and behaving
– well informed
– merely egocentric
– profit-maximizers (Milton Friedman: The Social Responsibility of Business is to
Increase Its Profits., The New York Times Magazine 13. September 1970)

• Underlies many models in business theory and

practice, e.g.,
– Principal-Agent theory
– Reward and Incentives models
– "Market economy"

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 41

 Limits of the HE Concept
Primarily conceived as a theoretical construction,
as 'as if' assumption, useful for modelization,
but:
– Bounded rationality (Simon, 1957, 1982)
– Heuristics & Biases (Tversky & Kahnemann 1974)
– Many pro-social behavior empirically observed (e.g., Fehr &
Gächter 2002)
Normatively justified through 'rising tide lifts all the
boats' and Smith's invisible hand,
but:
– Smith also presented individuals as embedded in a community; the
happiness of others is partly a condition of their own happinesss
(Smith, 1984 [1759], p. 9)
– The hoped-for 'welfare for all' is still awaited (Ghoshal and Moran,
1996; Nussbaum and Sen, 1993; Stiglitz, 2003)
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 42
 The View of the
Enlightenment
Immanuel Kant French Revolution: 21.1.1793
(1724-1804) decaptivation Ludwig XVI
◼ The law of large numbers is a rule that “even the stupidest man knows by some
instinct of nature per se and by no previous instruction.” - Jacob Bernoulli, Brief
an Leibniz, 1703

◼ Probabilities are the very guide of life. - Bishop Joseph Butler, 1736

◼ Probability theory is „nothing more at bottom than good sense reduced to a

calculus.“ - Pierre Simon de Laplace, 1814

◼ There is not only a close analogy between the operations of the mind in general
reasoning and its operations in the particular science of Algebra, but there is to
a considerable extent an exact agreement in the laws by which the two classes
of operations are conducted. - George Boole, 1854/1958

◼ Reasoning is nothing more than the propositional calculus itself. - Bärbel

Inhelder & Jean Piaget, 1958
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 43
 19th Century
◼ Computers
 Hardware(Charles Babbage, 1791-1871)
 Programming (Ada Lovelace, 1815-1852)
◼ Statistics – Pearson & Galton
◼ Evolutionary theory – Charles Darwin
Excursion (3+17 slides): An evolutionary
account on gender differences in risk
perception and risk-taking behavior

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 44

Gender Differences in Risk Taking
◼ Meta-analysis of 150 studies (Byrnes, J. P., Miller, D. C., & Schafer, W.
D. (1999). Gender differences in risk taking: A meta-analysis. Psychological
Bulletin, 125, 367–383.)
◼ Definition of risk taking:
 The act of implementing a goal-directed option qualifies as an instance
of risk taking whenever two things are true
◼ a) the behavior in question could lead to more than one outcome
◼ b) some of these outcomes are undesirable or even dangerous (Furby &
Beyth-Marom, 1992)
◼ Risk taking can either be adaptive or maladaptive:
 It is maladaptive whenever the benefits of some activity are far less
likely to occur than the potential hazards.
 It is adaptive whenever the converse is true.
 Hence, the study of gender differences has the potential for
demonstrating greater or lesser degrees of environmental adaptation in
women versus men.
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 45
 Gender Differences in Risk Taking
◼ Studies were coded with respect to
 type of task (e.g., self-reported behaviors vs. observed behaviors)
 task content (e.g., smoking vs. sex), and
 5 age levels
◼ Results:
 Greater risk taking in male participants in nearly every case (in 14 out of 16
types), 48% of the effects larger than .20 (i.e., the conventional cutoff for small
effects) (see Table 2)
◼ Males took more risks even when it was clear that it was a bad idea to take a risk.
◼ The opposite is true for women and girls: they seemed to be disinclined to take risks
even in fairly innocuous situations or when it was a good idea to take a risk (e.g.
intellectual risk taking)
 Effects varied according to context and age level (see Table 3):
◼ Nontrivial gender differences that seemed to increase with age (e.g., driving)
◼ Smaller gender differences at most ages (e.g., smoking)
◼ Shifts from positive to negative effects as children grow older (e.g., sexual activities)
 Significant shifts in the size of the gender gap between successive age levels
 The gender gap seems to be growing smaller over time

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 46

Results
(cont.)

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Gender Differences in Body Size
◼ Men are taller than women: between 10-15 cm, depending
on the country.
◼ Men are heavier than women: between 15-20 kg, depending
on the country.
◼ https://www.worlddata.info/average-bodyheight.php
◼ Can differences with respect to willingness to take risks and
body size and weight be explained by the same
mechanism? YES!

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 48

 Evolutionary Theory
◼ Before Darwin: Creationism (God) and Lamarckism
◼ Key concepts of Evolutionary Theory: Inheritable traits,
random mutations, differential reproductive success
◼ Selection pressure  → Adaptation
◼ Natural selection (survival) vs. Sexual selection (reproduction)
◼ Two kinds of sexual selection:
1. Intra-sexual selection: Individuals of one sex (typically males) evolve traits that
enable them to compete with other individuals of the same sex and win mating
opportunities.
2. Inter-sexual selection: Individuals of one sex evolve traits (physical and behavioural)
that are preferred by members of the opposite sex (typically females). This is referred to
as 'mate choice'.

◼ Sexual selection leads to sexual dimorphism in physical

and behavioural traits between males and females.
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 49
 Parental Investment Theory
◼ Trivers (1972) argued that a driving force behind sexual
selection is the degree of parental investment each sex
devotes to their offspring.
◼ Parental investment (PI) is defined as: “any investment
by the parent in an individual offspring that increases the
offspring’s chances of surviving (and hence reproducing)
at the cost of the parent’s ability to invest in other
offspring”.
◼ In most species, females invest heavily in their offspring
while males do not.
Lit: Trivers, R. L. (1972). Parental investment and sexual selection. In B. Campbell (Ed.),
Sexual selection and the descent of man (pp. 136–179). Chicago: Aldine.
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 Parental Investment Theory
◼ Women: Higher biological investment
 In a given dimorphic species, mate choice for female is generally more
important than for male (Kendrick, Trost, & Sheets, 1996).
 Since women have to invest more during pregnancy and childbirth, they
are more selective of their partner (Buss & Malamuth, 1996).
◼ Implications for men:
 This universal preference has chosen men capable of providing for the
needs of the child with the resources at their disposal.
 Men are more competitive with other men for a woman. This has created
a strong demand for men capable of offering important resources,
resulting in characteristics such as
◼ assertiveness,
◼ aggressiveness, and
◼ sensitivity for a hierarchy established between men.

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 51

 Male Parental
Investment
Benefit (Reproductive Success)
Cost (Parental Investment) and

Female ParentaI
Investment Reproductive
Success

SEXUAL
CONFLICT

Fopt Mopt
No. offspring produced
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 52
 Parental Investment Theory:
Quote from Trivers (1985)

“An ancestral woman who had sex with 100 men in the course of a year
would still have produced a maximum of one child. An ancestral man
who had sex with 100 women during the same time would have most
likely produced substantially more than one child….In sum, for the high-
investing sex (typically, females), the costs of indiscriminate sex are high
whereas for the low investing sex (typically, males), these costs are low.

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 53

 Parental Investment Theory:
Predictions
◼ “The sex that invests more in offspring should be more choosy about
potential mates than the sex that invests less in offspring.” (Trivers,
1985). Since women have to make a greater obligatory investment in
offspring though gestation and infant care, they are more choosy about
whom they are going to mate with (Buss & Malamuth, 1996)
◼ The sex that invests least in an offspring (typically males) should
compete more vigorously for access to the higher-investing sex.
◼ Male competition leads to physical dimorphism, and will be most
marked in animals where there is little male parental investment (e.g.,
elephant seals).
◼ Where male investment approaches that of females, competition will be
reduced as will sexual dimorphism (e.g., swans).
◼ Where male parental investment is higher, females will possess
typically male characteristics.

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 54

 Female Reproductive Strategy
◼ Females have much to lose if they mate with the wrong male,
they are thus selective about who they mate with.
◼ They look for certain criteria:
 Physical Features: size and strength which confer dominance and so
preferential access to resources.
 Behavioural Features: may indicate willingness to invest or good
parenting skills.
◼ Females will compete with other females for the right to
choose the most desirable (alpha) males.
◼ They gain little from multiple matings and seek quality not
quantity.
◼ Almost every reproductively capable female will be able to
find a mate of some sort.

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 55

 Male Reproductive Strategy
◼ Males are far less choosy as they as they little to lose and
everything to gain if they can have as many mating
opportunities as possible.
◼ Males are not tied to rearing offspring and so they seek
quantity.
◼ While they would prefer a superior female, they are less
choosy.
◼ If presented with a sexual opportunity they will take it.
◼ Males compete vigorously with other males for access to fertile
females.
◼ Male reproductive success is however very variable, a small
number of males will achieve many matings, while many males
may never mate.
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 56
 Parental Investment Theory:
Evidence
◼ Cross species patterns of sexual behavior
◼ Males are almost always more promiscuous, aggressive in courtship
◼ Pattern is reversed among “oddball” species in which males have
greater investment
 E.g., Pipefish, Phalaropes, Panamanian poison-arrow frog, certain
species of waterbugs, and the mormon cricket.

◼ Cross-cultural similarities in human studies: Buss and

Schmitt (1993)
 Number of sexual partners desired
 Probability of consenting to sexual intercourse
 Preferred age difference
 Importance of spouse being a good financial prospect
 Importance of physical attractiveness

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Number of Sexual Partners Desired

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Probability of Consenting to
Sexual Intercourse

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Preferred Age Difference

Buss, 2001, p. 113

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Importance of Financial Status of Mate

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Earning Capacity of Mate

Kenrick et al., 1990

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 Dating Behavior

Women Men
◼ Would you like to have dinner with me tonight?
50% 50%
◼ Would you like to come to my place tonight?
6% 69%
◼ Would you like to have sex with me tonight?
0% 75%
Clark & Hatfield (1989)
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 Average and Variance of
Reproductive Success

Low, 2000, p. 55
Male Female

To wrap up: Parental investment theory can account for the

fact that men are more risk seeking than women
Relative scarcity of mating opportunities (women are choosy)
drives men into competition – in a game where it pays to take
risks
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 64
Parental Investment Theory (PIT) and Feminism
◼ Scope
 PIT focuses on bodies -- and on humans as animals
 Feminism focuses on humans as members of society: humans as citizens
◼ Nature versus What humans do about it
 PIT: Sex differences (biologically determined)
 Gender differences (socially constructed, loosely coupled to sex)
◼ Nature vs. Nurture
◼ Environment of Evolutionary Adaptedness (EEA)
◼ Naturalistic fallacy
 PIT is about what IS the case
 Feminism is largely about what OUGHT to be the case
◼ Desirability of Differences
 Men are stronger than women, but they also die earlier (which would you prefer?)
 Men are more violent and aggressive, women are more empathic and social (which would
you prefer?)
◼ Feminist: Being physically stronger does not legitimize having more power in
society («is» should not be confused with «ought»)
Fausto-Sterling, A., Gowaty, P. A., & Zuk, M. (1997). Evolutionary psychology and Darwinian feminism.
Feminist Studies, 23(2), 402-417.
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 65
 1st Half of 20th Century
◼ Concepts of probability and statistics
 Frequentist viewpoint: von Mises
 Subjective viewpoint: de Finetti, Ramsey
 Statistical testing: Fisher, Pearson, Neyman

◼ Psychology - two dominant paradigms:

 Psychoanalysis
 Behaviorism

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 66

 Psychoanalysis
◼ Sigmund Freund (1856-1939): Three humiliations (affronts)
 Cosmological humiliation: The first shock was the discovery, connected with the
name Copernicus, that the earth is not the center of the universe (see Copernican
Revolution).
 Biological humiliation : The second offense lay in the discovery that man has
emerged from the animal series (Charles Darwin and others).

 Psychological humiliation: The third offense

was the libido theory of the unconscious
(Freud). A considerable part of the soul's life
escapes the knowledge and rule of the
conscious will. Psychoanalysis confronts
consciousness with the painful insight that
the ego is not the master in its own house.
→ Unconscious Processes
Sigmund Freud
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 67
 Behaviorism
◼ Classical Conditioning (Ivan Pawlov, 1849-1936)
Repeatedly combine giving food with sound of bell
→ bell alone leads to salvation.
◼ Operant Conditioning (e.g., Hull, Thorndike, Skinner)
Edward Thorndike’s law of effect: “Responses that produce a satisfying
effect in a particular situation become more likely to occur again in that
situation, and responses that produce a discomforting effect become less
likely to occur again in that situation” (Gray, 2011, pp. 108–109).
This law describes the behavior of cockroaches, chicken, chimpanzees,
children, and CEOs.
◼ Focus on Behavior and on Learning, stimulus-response
psychology, proud of NOT considering cognitive
processes
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 68
 The 1940s
◼ Computers that can be used
◼ 1943 Maslow (Book: A theory
of human motivation)
◼ von Neumann & Morgenstern
axiomatized expected utility
theory (1947) and made
operational a notion of rational
behavior (Book: Theory of
Games and Economic
Behavior)
John von Neumann Oskar Morgenstern
◼ The importance of consistency
with logical schemes.

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 69

 Kolmogorov Axioms
1. Probabilities are not negative: 0 ≤ p(A) ≤ 1.
2. The probability of a certain event C is one: p(C) = 1; the probability
of an impossible event  is zero: p() = 0.
3. The probability that either the one or the other of two incompatible
events occurs is the sum of both probabilities:
p(A or B) = p(A) + p(B), if A and B = Ø

Deduction:
e.g.: If ¬A is the complement of A, then is: p(A) + p(¬A) = 1.
◼ ¬A and A are mutually exclusive
◼ P(A or ¬A) = p(A) and p(¬A) [see 3]
◼ (A or ¬A) corresponds to C (certain event)
◼ Therefore: p(A) + p(¬A) = C = 1 [see 2]

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 70

 Axiomatization
of the (S)EU Model
◼ Von Neumann and Morgenstern (1947) and Savage (1954)

◼ If a person acts according to certain axioms, then the subjective

“utilities” of this person can be defined, and it can be assumed
that the person will prefer X to Y when EU(X) > EU(Y).

◼ Several axioms are central. Three of them are:

 comparability
 transitivity
 cancellation
 ... Principles of rational decision making
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 71
 Comparability
A decision maker can compare the alternatives and
prefers either X to Y, or Y to X, or she is indifferent (X ~ Y)

 Example: A company prefers a job candidate A, who is a

good team player with a probability of p, to a candidate
B, who will settle into the new job quickly with a
probability of q.

 The company could be indifferent between the two

candidates; however, it is impossible to prefer both.

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 72

 Transitivity
When a decision maker prefers option X to Y and Y to Z, then
she prefers as well X to Z.

 Example: A company prefers a job candidate A, who is a

good team player with a probability of p, to a candidate B,
who will settle into the new job quickly with a probability of q.
Moreover, the company prefers candidate B, who will settle
into the new job quickly with a probability of q, to a
candidate C, who is flexible with a probability of r. Hence,
the company prefers candidate A to candidate C.

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 73

 Cancellation
When two options have identical and equally probable
consequences, then these consequences should not make
any difference.

 Example: Job candidate A will settle into the new job

quickly with a probability of p1; candidate B will be flexible
with a probability of p2. Candidates A and B are good team
players with a probability of p3.

 The cancellation axiom implies that the information about

quality as team player is irrelevant for the decision between
two options, simply because it is the same for both options.

◼ Allais-Paradox (Maurice Allais, 1953)

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 74

 The 1950s

1952 1953 1954

Egon Brunswik Maurice Allais Ward Edwards
(Book: “The conceptual Nobel-prize winner 1988 (key review in
framework of psychology”, (choice paradox) Psych. Bulletin)
probabilistic functionalism)
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 75
 The 1950s (continued)
◼ 1954 Savage (Book: The foundations of statistics, SEU in
“small” worlds, metaphor “life is a gamble”)
◼ 1954 Meehl (Book: Clinical vs. statistical prediction),
bootstrapping
◼ 1955 Hammond (judgment as perception)
Simon (bounded rationality)
◼ 1956 Bruner, Goodnow & Austin (A study of thinking:
concept learning via logical schemes)
◼ 1956 Brunswik (representative design)
◼ 1956 Simon (importance of the environment)
◼ 1956 Miller (Magic number 7, +/- 2)

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 76

 The 1960s
◼ 1960 Wason (2-4-6 task)
◼ 1966 Wason (4-card selection task)

◼ 1967 Peterson & Beach (Man as an intuitive statistician)

Estimation of means, variance, proportions
Conclusion: normative models fit responses quite well. Even if not,
they can be used as good starting points to model behavior.

Urns-and-balls paradigm
Two urns: Urn B: 70% blue (and 30% red)
Urn R: 70% red (and 30% blue)
a priori probability for B and R: 50%
Evidence: Sample of 4 blue and 1 red
What is the a-posterior probability for urn B?

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 77

 The 1970s
◼ 1972 Newell & Simon (human problem solving)
◼ 1972 Wason & Johnson-Laird (Book: Psychology of reasoning)
◼ 1974 Tversky & Kahneman (heuristics and biases)
◼ 1975 Wason & Evans (Dual process theory of reasoning)
◼ 1976 Keeney & Raiffa (MAUT)
◼ 1979 Dawes (linear models)
◼ 1979 Kahneman & Tversky (prospect theory)

Daniel Kahneman Amos Tversky

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 The 1980s
◼ 1980 Nisbett & Ross (social psychology)
◼ 1980 Thaler (economics)
◼ 1980 Schelling
(Book: Micromotives and Macrobehavior)
◼ 1981 Anderson (integration theory)
◼ 1982 Raiffa (negotiations)
◼ 1983 Johnson-Laird (Mental Models Theory)
◼ 1986 Hogarth & Reder (Book: Rational choice:
The contrast between economics and psychology)
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 79
 The 1990s
◼ 1990 Camerer (game theory; Fehr)
◼ 1994 Gigerenzer (critique of K&T)
◼ 1994 Damasio (neuroscience)
◼ 1994 Epstein (automatic vs deliberate thought)
◼ 1995 Gigerenzer & Hoffrage (natural frequencies)
◼ 1996 Cosmides & Tooby (evolution)
◼ 1996 Anderson (Architecture of Cognition: ACT-R)
◼ 1998 Stanovich & West
(individual differences in rational thought)
◼ 1998 Rabin (behavioral economics)
◼ 1999 ABC Research Group (Book: Simple heuristics…)
Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 80
 The 2000s
◼ 2000 Haselton & Buss (Error Management Theory)
◼ 2000 Slovic (The affect heuristic)
◼ 2001 Haidt (The emotional dog and its rational tail)
◼ 2004 Hertwig, Barron, Weber, & Erev
(Decision from experience vs description)
◼ 2004 Camerer, Loewenstein, Poldrack, Fehr
(Neuroeconomics – Decision Neuroscience)
◼ 2005 Gallagher (embodied cognition)
◼ 2007 Oaksford & Chater
(Book: Bayesian Rationality)
◼ 2008 Klein (Naturalistic Decision Making)
◼ 2009 Thaler & Sunstein (Book: Nudge)

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 81

 The 2010s
◼ 2011 Kahneman
(Book: Thinking, fast and slow)
◼ 2011 Gigerenzer & Gaissmaier
(Article: Heuristic decision making)
◼ 2012 Gigerenzer, Todd, & the ABC Research Group
(Book: Ecological Rationality)
◼ 2013 Hertwig, Hoffrage, & the ABC Research Group
(Book: Simple Heuristics in a Social World)

Prof. U. Hoffrage, HEC Lausanne, Summer 2025 - JDM-Lecture: Unit 2 82