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Previous chapters have made liberal use of intuitive judgments about cases and principles. The book has also discussed the difference of opinion between some nonconsequentialists and some consequentialists (such as Peter Unger and Peter Singer) about the use of such judgments. Are the methods and results of cognitive psychology relevant to the questions these philosophers ask about the form and validity of a moral theory and the methods used in moral philosophy? This chapter examines aspects of this very large question by considering some of the methods and results of psychologists Daniel Kahneman and Amos Tversky, especially in connection with their development of Prospect Theory. It presents certain claims made by Kahneman about moral theory, the use of intuitions, and the identification of the bearers of utility. It also explores the theory of gains and losses in Kahneman and Tversky's work and its relation to the supposed moral contrast between harming and not-aiding. Finally, it discusses what a moral theory based on the loss/no-gain distinction of Prospect Theory might look like.

From the 1970s well into the 1990s, psychological research on human rationality was dominated by the so-called heuristics-and-biases approach as developed by Daniel Kahneman, Amos Tversky, and others. They assumed that formal rules of logic, probability theory, and rational choice theory provided the norms of rationality, and that humans all too often fall short of these standards, instead employing heuristics that can lead to biases. Political scientists and policy analysts applied this approach to many other areas, from voting behavior to arms negotiations to international crisis management. However, following a scathing critique by the philosopher L. Jonathan Cohen in 1981, many psychologists began to raise strong objections to the heuristics-and-biases approach. Eventually, the Cold War hope for a unified concept of rationality providing the tools for perfectly understanding, predicting, and dealing with political conflict was destroyed. It is not clear what should replace it.

There has been almost universal agreement that Aristotle's so-called reduction of metaphors to similes is hopelessly inadequate. The philosophers who have lined up against Aristotle are an impressive group of leading philosophers, including Max Black, John Searle, Nelson Goodman, and Donald Davidson. Their criticisms are examined in close detail and rejected. At bottom, they all seem to turn on the same mistake, namely, that Aristotle's treatment of metaphors as elliptical similes amounts to reducing metaphors to literal comparisons when, in fact, Aristotle holds that similes are themselves figurative. The chapter takes over Tversky's account of the relationship between literal and figurative comparisons, taking the notion of salience as central.

This chapter examines the relevance of psychology to the world of investing. Psychologists are concerned with understanding all workings of the brain—the part that controls cognition (the process of thinking and knowing), as well as the part that controls emotion. This leads them to investigate how we learn, how we think, how we communicate, how we experience emotions, how we process information and make decisions, and how we form the core beliefs that guide our behavior. Behavioral finance, which seeks to explain market inefficiencies using psychological theories, was born of the academic work of Daniel Kahneman and Amos Tversky, especially their prospect theory. This chapter considers the concept of loss aversion, embedded in prospect theory, and how it forced economists to rethink their basic assumptions of how people make decisions. It also discusses the ideas of scholars such as Benjamin Graham, Terence Odean, Fischer Black, Claude E. Shannon, and Charlie Munger, along with the importance of mental models for investors.

In the Cartesian paradigm, similarity of sensation is explained by the similarity of receptor state; it is shown that this is empirically mistaken. C. R. Gallistel has suggested that sensory similarity reflects topological proximity in a neural feature map; this sort of thesis explains why similarity with respect to a single parameter is invariant (see Ch. 4). The system constructs such maps because it needs to resolve imprecision in neural representations and to determine a precise response to the situations represented. Such internal origins of sensory similarity do not preclude realism. Sense features are physically specifiable; in addition, they serve some purpose in the organism by signalling similarities of functional relevance: thus, it is possible for an organism to be wrong about similarity.

This chapter develops the weighted feature-matching account of similarity. Most accounts of the model–world relation draw on logical properties such as isomorphism and homomorphism. In contrast, accounts offered by Nancy Cartwright and Ronald Giere emphasize that the model–world relation is one of similarity in certain respects and degrees, but they provide little further analysis. Weighted feature-matching, which is derived from Amos Tversky’s contrast account of similarity, is a way of formalizing the notion of similarity in respects and degrees. Roughly, it says that a model is similar to its target when they share many, and do not fail to share too many, features that are thought to be salient by the scientific community.

The concept of human “error” was central to patient safety’s rise to prominence. Unfortunately healthcare developed a rather limited understanding of “error” from a complex body of work that had been evolving from different disciplines, such as psychology, sociology, and organization science. A focus on “human error” and this deficit thinking proved useful to healthcare as it was undergoing a managerial turn. The so-called “Clambake Conferences” exemplified a broad range of evolving thought about accidents and error, and the utility of the very concept of “error” became challenged.

A theory of justified belief is presented which ties the notion of justification to that of responsibility. A belief is said to be justified just in case it is the product of epistemically responsible action. Since belief is not subject to direct voluntary control, the relevant acts are not acts of believing, but rather acts which may be freely chosen and which have an effect on the processes by which beliefs are produced. Work by Tversky and Kahneman and Nisbett and Ross on judgmental heuristics is used to show that beliefs produced by epistemically responsible action need not be produced by reliable processes, and indeed, need not conform to any standard theory of idea belief acquisition.