Reputational Rationality Theory

Abstract

Traditionally, research on human judgment and decision making draws on cognitive psychology to identify deviations from normative standards of how decisions ought to be made. These deviations are commonly considered irrational errors and biases. However, this approach has serious limitations. Critically, even though most decisions are embedded within complex social networks of observers, this approach typically ignores how decisions are perceived by valued audiences. To address this limitation, this article proposes reputational rationality theory: a theoretical model of how observers evaluate targets who do (vs. do not) strictly adhere to normative standards of judgment and choice. Drawing on the dual pathways of homophily and social signaling, the theory generates testable predictions regarding when and why observers positively evaluate error-prone decision makers, termed the benefit of bias hypothesis. Given that individuals hold deep impression management goals, reputational rationality theory challenges the unqualified classification of response tendencies that deviate from normative standards as irrational. That is, apparent errors and biases can, under certain conditions, be reputationally rational. The reputational rewards associated with cognitive biases may in turn contribute to their persistence. Acknowledging the (sometimes beneficial) reputational consequences of cognitive biases can address long-standing puzzles in judgment and decision making as well as generate fruitful avenues for future research.

The contingent reputational benefits of selective exposure to partisan information.

“…We build on impression management research by applying this theoretical lens to information selection decisions. Across social science disciplines, impression management research has flourished as scholars recognize the role that reputational concerns play in an array of seemingly irrational behaviors (Dorison, 2022, 2023; Dorison et al, 2021; Jordan, Hoffman, Bloom, & Rand, 2016; Jordan, Hoffman, Nowak, & Rand, 2016; Tenney et al, 2019). However, thus far, explanations of selective exposure have been primarily focused on intrapersonal reasons, often rooted in avoidance of negative emotions (Dorison et al, 2019; Frimer et al, 2017).…”

“…However, a narrow focus on intrapersonal drivers may neglect other important causes of the phenomenon. For example, an extensive literature demonstrates that people care deeply about their reputations and the impressions they leave on others (Baumeister & Leary, 1995; Berman et al, 2015; Dorison, 2023; Dorison & Heller, 2022; Goffman, 1959; Jones & Pittman, 1982; Leary & Kowalski, 1990; Lerner & Tetlock, 1999; Mayer et al, 1995; Schlenker & Weigold, 1992; Tetlock, 2000, 2002; Westphal & Graebner, 2010). Indeed, much of our decisionmaking takes place in social settings, under the watchful eyes of both friends and foes.…”