As I mentioned yesterday, I am going to spend some time on judgment and decision making. Besides determining a destination,¹ it is important to note that there is a difference between these two terms.

The distinction between judgment and decision making appeared as fuzzy as the distinction between judgment and prediction. But to Amos, as to other mathematical psychologists, they were distinct fields of inquiry. A person making a judgment was assigning odds. How likely is it that that guy will be a good NBA player? How risky is that triple-A-rated subprime mortgage–backed CDO²? Is the shadow on the X-ray cancer? Not every judgment is followed by a decision, but every decision implies some judgment. The field of decision making explored what people did after they had formed some judgment—after they knew the odds, or thought they knew the odds, or perhaps had judged the odds unknowable. Do I pick that player? Do I buy that CDO? Surgery or chemotherapy? It sought to understand how people acted when faced with risky options.³

There are both internal and external challenges inherent in assigning odds and in making a decision in light of these odds. I’ll make a survey of judgment and decision making during the next couple days.