The focus of our attention is the individual decision maker facing a choice involving uncertainty about outcomes. We will consider how people do make decisions, how “rational” people should make decisions, and how we might help less rational people, who nevertheless aspire to rationality, to do better. When we speak of nonrational people, we do not mean those with diminished capacities; we refer instead to normal people who have not given thought to the process of decision making or, even if they have, are unable, cognitively, to implement the desired process. Our decision makers are not economic automatons; they make mistakes, have remorse, suffer anxieties, and cannot make up their minds. We start with a premise, not that people have well thought out preferences, but that they may be viewed as having divided minds with different aspirations, that decision making, even for the individual, is an act of compromise among the different selves.
For our purposes we shall augment the usual dichotomy that distinguishes between the normative and descriptive sides (the “ought” and the “is”) of decision making, by adding a third component: the prescriptive side. We do this because much of our concern in this paper addresses the question: “How can real people – as opposed to imaginary, idealized, super-rational people without psyches – make better choices in a way that does not do violence to their deep cognitive concerns?” And we find that much that we have to say on these matters does not fit conveniently into the usual normative or descriptive niches.
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