Decision making, risk taking and psychological time: Review of empirical findings and psychological theory

Three domains of research (1) involvement in past and future events, (2) knowledge of the past and the future, and (3) value as a function of time (discounting) were used to elucidate man's limitations when he makes decisions based on earlier experience with consequences in the close and distant future. Evidence from all three areas illustrate that man is captured in a narrow time‐space sphere around “here and now”.—One consequence of this limitation is that risk‐willingness increases the longer ahead the outcome of a decision is likely to occur. To specify, the less we are involved in, the less we know of and the less the consequences are evaluated the larger is our willingness to make decisions with future risks. Learning from experience seems to play a minor role in improving decision making. Ill‐defined problems and non‐distinct outcomes make “economic man” fairly useless as a norm for decision making in decisions with longranging effects and of a non‐repititive character.—The paper ends with a discussion of strategies that can compensate for the limitations of distal cognition.