Running head: Surprise in Decision Making SURPRISE IN DECISION MAKING UNDER UNCERTAINTY

In four experiments we investigate overand underweighting of probabilities in decisions under risk. To account for this phenomenon we propose a view of the probability weighting function as a composite of cognitive and emotional processes and suggest that there is no single weighting function but two separate weighting functions for each process. Data obtained from a rating as well as three choice experiments, using both between and within subjects designs, generally support the proposed view. Given this broader perspective, cognitive "biases" or "errors" may turn out as highly intelligent solutions to maximize utility. * Dr. Eduard Brandstätter, Dept. of Social and Economic Psychology, University of Linz, A-4040 Linz, Austria. Phone: 0043-732-2468-578, Fax: 0043-732-2468-9315. E-mail: [email protected] ** Dr.Anton Kühberger, Dept. of Psychology, University of Salzburg, A-5020 Salzburg, Austria. Phone: 0043-662-8044-5112, Fax: 0043-662-8044-5126. E-mail: [email protected] *** Professor of Economics, Dr. Friedrich Schneider, Dept. of Economics, University of Linz, A-4040 Linz, Austria. Phone: 0043-732-2468-210, Fax: 0043-732-2468-209. E-mail: [email protected]