Cognitive Psychology (PSYC 110) · Module 8 of 10
Dual-Process Theory & Decision-Making
Two systems of thought, and how the way choices are framed can matter more than their substance.
System 1 vs. System 2 Thinking
- Dual-process theory, popularized by Kahneman, distinguishes System 1 — fast, automatic, intuitive, effortless thinking — from System 2 — slow, deliberate, analytical, effortful thinking.
- Most everyday judgments rely on System 1, which is efficient but prone to systematic biases; System 2 can override System 1 but requires conscious effort and cognitive resources.
Why are heuristics like availability and representativeness generally considered products of System 1 thinking?
Solution. Heuristics are fast, automatic mental shortcuts that require little conscious effort — the hallmark of System 1 — rather than the slow, deliberate, effortful analysis characteristic of System 2.
Framing Effects
- A framing effect occurs when the way a decision or choice is presented, its "frame," rather than its actual substance, influences the decision made — for example, reacting differently to a treatment described as "90% survival rate" versus "10% mortality rate.".
Why might people respond more positively to a medical treatment described as having a "90% survival rate" compared to the logically identical "10% mortality rate"?
Solution. This is a framing effect — the positive frame emphasizes a favorable outcome while the negative frame emphasizes an unfavorable one, and even though the statistical information is identical, the framing influences people's emotional response and decision.
Prospect Theory
- Prospect theory (Kahneman & Tversky) proposes that people evaluate potential outcomes as gains or losses relative to a reference point, rather than in terms of absolute final wealth, and that losses typically feel psychologically more impactful than equivalent gains — "loss aversion.".
According to prospect theory's concept of loss aversion, how would losing $50 typically feel compared to gaining $50?
Solution. Losing $50 would typically feel more painful than the pleasure of gaining $50 feels good, even though the objective amounts are equal — this asymmetry is what 'loss aversion' describes.
Bounded Rationality
- Bounded rationality (Simon) proposes that human decision-making is limited by cognitive capacity, available information, and time, so people often "satisfice" — choosing an option that is good enough — rather than exhaustively optimizing for the single best possible choice.
Why might a person choose the first "good enough" apartment they find, rather than exhaustively comparing every available apartment to find the objectively best one?
Solution. This illustrates bounded rationality and satisficing — given limited time, information, and cognitive resources, it's often more practical to accept a satisfactory option once found, rather than incurring the cost of an exhaustive search for the theoretically optimal choice.
Check yourself
2 of this module's 5 quiz questions. Pick your answers, then check them in the app, with an explanation for every question.
1. What characterizes System 1 thinking?
2. What characterizes System 2 thinking?