On 29th October, 2020, we welcome Prof. Chew Soo Hong to our series lecture on “Economics and Business”, as well as his speech on Decision Error and Contingent Reasoning. Prof. Chew Soo Hong is the Chair Professor at National University of Singapore and the 11th Fellow of Chinese in Econometric Society since 2011 when he was elected. He is mainly engaged in the research on Decision Theory, Behavioral and Biological Economics, and Experimental Economics. The lecture was hosted by Assistant Prof. Zhuang Hao from School of Economics and Management at Beihang University.
In the following lecture, Prof. Chew Soo Hong argued that a number of decision-making puzzles each pointed to some form of choice error which may be attributable to a failure in contingent reasoning. Besides the Allais’ (1953) common-consequence problem and Ellsberg’s (1961) three-color problem, Prof. Chew discussed the Monty Hall problem, the failure of the Becker-DeGroot-Marschak mechanism as discussed in Cason-Plott (2014), and the acquiring-a-company problem (Samuelson-Bazerman, 1985) which related to Akerlof’s (1970) lemons problem and the winner’s curse in common value auctions (Capen, Clapp, and Campbell, 1971; Charness and Levin, 2009). Prof. Chew offered a definition of contingent reasoning which relied on aggregating the contingency-induced choices arising from hypothetical knowledge. This helps shape the design of experiments by adopting a treatment which exposes the decision maker to hypothetical knowledge relating to the situation at hand before making the actual incentivized choices. Results from preliminary studies indicate that our hypothetical knowledge treatment is effective in enhancing the quality of decision making by reducing the incidence of failure in contingent reasoning ex ante. It appears that a hypothetical-knowledge based enhancement of decision making may be applicable to a wide range of settings especially where education and training are involved.
During and after the lecture, more than 20 scholars and students from BUAA SEM discussed the key points of the talk with Prof. Chew Soo Hong and also raised quite a few relevant questions, which provoke further thinking on the issue from both parties.
