If payoffs are tickets for binary lotteries, which involve only two money prizes, then rationality requires expected value maximization in tickets. This payoff scheme was increasingly used to induce risk neutrality in experiments. The experiment presented here involved lottery choice and evaluation tasks. One subject group was paid in binary lottery tickets, another directly in money. Significantly greater deviations from risk neutral behavior are observed with binary lottery payoffs. This discrepancy increases when subjects have easy access to the alternatives' expected (...) values and mean absolute deviations. Behavioral regularities are observed at least as often as with direct money payoffs. (shrink)

We propose that people typically reason about realistic situations using neither content-free syntactic inference rules nor representations of specific experiences. Rather, people reason using knowledge structures that we term pragmatic reasoning schemas, which are generalized sets of rules defined in relation to classes of goals. Three experiments examined the impact of a “permission schema” on deductive reasoning. Experiment 1 demonstrated that by evoking the permission schema it is possible to facilitate performance in Wason's selection paradigm for subjects who have had (...) no experience with the specific content of the problems. Experiment 2 showed that a selection problem worded in terms of an abstract permission elicited better performance than one worded in terms of a concrete but arbitrary situation, providing evidence for an abstract permission schema that is free of domain-specific content. Experiment 3 provided evidence that evocation of a permission schema affects not only tasks requiring procedural knowledge, but also a linguistic rephrasing task requiring declarative knowledge. In particular, statements in the form if p then q were rephrased into the form p only if q with greater frequency for permission than for arbitrary statements, and rephrasings of permission statements produced a pattern of introduction of modals totally unlike that observed for arbitrary conditional statements. Other pragmatic schemas, such as “causal” and “evidence” schemas can account for both linguistic and reasoning phenomena that alternative hypotheses fail to explain. (shrink)