Judgment and Decision Making: An Interdisciplinary Reader (Cambridge Series on Judgment and Decision Making)

The major criticism of this book is the omission of any discussion of John Maynard Keynes's unique and highly original contributions to decision making under risk,uncertainty,and ignorance that were made, long before Ellsberg,Tversky and Kahneman were even born,in the A Treatise on Probability in 1921.Keynes,not Ellsberg,was the first to specify an index to take into account the relative credibility of the available information base upon which the decision maker would base his probability calculations.Keynes's index specifies the weight of the evidence,w,as a measure of the completeness of the relevant information currently and potentially available.w is defined on the unit interval [0,1],0<=w<=1.Keynes,not Ellsberg,was the first to incorporate his w variable(Ellsberg's rho variable)into a decision rule which generalized both the expected (monetary)value and (subjective)expected utility rules.Instead of maximizing EMV=pA or SEU=pU(A),the decision maker would maximize cA,where c=p(1/[1+q])[2w/(1+w)].Keynes's decision rule,not Tversky and Kahneman's Prospect theory,was the first to provide decision weights,called by Keynes conventional coefficients of weight and risk(see c above),that provided explicit numerical solutions to the certainty,reflection,translation,and preference reversal effects.Keynes,not I Good,B Koopmans or H Kyburg,was the first to present a mathematically and technically sound exposition of a clearly specified interval(set) estimate approach for probability.Finally ,Keynes's weight of the evidence approach allows one to clearly distinguish between risk,uncertainty,and ignorance.Risk is the case if w=1.Ignorance is the case if w=0.Uncertainty(or ambiguity)is the case if 0<w<1.Risk can then be further separated into linear risk and nonlinear risk,which requires Keynes's modified c formula,c=p/(1+q).The fact that Keynes got to the mountain top first before Ellsberg and Tversky-Kahneman does not mean that the forms of analysis developed and applied by Ellsberg and Tversky-Kahneman are unsound.On the contrary,as made clear in this book,they are very sound.However,at the theoretical level,they are not original.What is original is the empirical and experimental evidence accumulated over a 30-40 year period that provides confirmation of their conclusions,as well as those of Keynes.

Research on judgment and decision making is so wide and deep that it is hard to find your way through it. This book, as it has been written on back cover, was written in an interdisciplinary format. Readers can find valuble and detailed applied research subject on psychology, economics, law, health, ... etc. Needless to say this book is most suitable for professionals.Dogan Kokdemir