Analytical/Intuitive Thinking: PART II, Know Yourself!

If you haven't taken the Cognitive Reflection Test (CRT), do so at the PART I posting before continuing here.

The questions are designed so that one answer (the intuitive solution) immediately comes to mind. The correct answer is the analytical solution, however. The most common answers to Shane Fredericks' CRT questions are:

1) If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? _______ minutes

Analytical answer: 5 minutes
Intuitive answer: 100 minutes

2) In a lake, there is a patch of lily pads. Everyday, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half the lake? _________ days

Analytical answer: 47 days
Intuitive answer: 24 days

3) A bat and ball together cost $1.10. The bat costs $1.00 more than the ball. How much does the ball cost? _________ cents

Analytical answer: 5 cents
Intuitive answer: 10 cents

If you got two or three of the analytical answers, then you are an analytical thinker. If you got none or one analytical answers, you are an intuitive thinker. Shane found that the average number of analytical answers for Massachusetts Institute of Technology students was 2.18. Since they tend to be engineering students, this is not surprising. A Harvard choir group average was 1.43 and University of Toledo student average was 0.57.

There are many decision-making activities in which it may be better to be an intuitive thinker. Other situations favor analytical thinkers. What might be better for investing decisions?

See the PART III: Risk Aversion for further discussion on analytical and intuitive thinkers.

(See Shane Frederick, 2005, "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, 19(4), pages 25-42.)