Humans are not perfect decision makers. Not only are we not perfect, but we depart from perfection or rationality in systematic and predictable ways. The understanding of these systematic and predictable departures is core to the field of judgment and decision making. By understanding these limitations, we can also identify strategies for making better and more effective decisions.

Introduction

Every day you have the opportunity to make countless decisions: should you eat dessert? cheat on a test? attend a sports event with your friends? If you reflect on your own history of choices you will probably realize that they vary in quality; some are rational and some are less so.

In his Nobel Prize–winning work, psychologist Herbert Simon (1957; March & Simon, 1958) argued that our decisions are bounded in their rationality. According to this bounded rationality framework, we try to make rational decisions (such as weighing the costs and benefits of a choice) but our cognitive limitations prevent us from being fully rational. Time and cost constraints limit the quantity and quality of the information that is available to us. Moreover, we retain only a relatively small amount of information in our working memory, and limitations on intelligence and perception constrain the ability of even very bright decision makers to accurately make the best choice based on the information that is available.

About 15 years after the publication of Simon’s seminal work, Tversky and Kahneman (1973, 1974; Kahneman & Tversky, 1979) produced their own Nobel Prize–winning research, which provided critical information about specific systematic and predictable biases that influence judgment (Kahneman received the prize after Tversky’s death). The work of Simon, Tversky, and Kahneman paved the way to our modern understanding of judgment and decision making. And their two Nobel prizes signaled the broad acceptance of the field of behavioral decision research as a mature area of intellectual study.