Novel Approach to Modeling Investor Decision-Making Using the Dual-Process Theory: Synthesizing Experimental Methods from Within-Subjects to Between-Subjects Designs

Rachel Lipshits, Kelly Goldstein, Alon Goldstein, Ron Eichel () and Ayelet Goldstein
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Rachel Lipshits: Department of Education and Psychology, The Open University of Israel, P.O. Box 808, Raanana 43107, Israel
Kelly Goldstein: The School of Psychological Sciences, Tel-Aviv University, P.O. Box 39040, Tel Aviv 6997801, Israel
Alon Goldstein: The School of Mathematical Sciences, Tel-Aviv University, P.O. Box 39040, Tel Aviv 6997801, Israel
Ron Eichel: Sir Harry Solomon School of Economics and Management, Western Galilee College, Hamichlala Road, Acre 2412101, Israel
Ayelet Goldstein: Department of Mechanical Engineering, Braude College of Engineering, Snunit 51 St., P.O. Box 78, Karmiel 2161002, Israel

Mathematics, 2025, vol. 13, issue 19, 1-29

Abstract: This paper addresses a central contradiction in dual-process theories of reasoning: identical tasks produce different outcomes under within-subjects and between-subjects experimental designs. Drawing on two prior studies that exemplify this divergence, we synthesize the empirical patterns into a unified theoretical account. We propose a conceptual framework in which the research design itself serves as a cognitive moderator, influencing the dominance of System 1 (intuitive) or System 2 (analytical) processing. To formalize this synthesis, we introduce a mathematical model that captures the functional relationship between methodological framing, cognitive system engagement, and decision accuracy. The model supports both forward prediction and Bayesian inference, offering a scalable foundation for future empirical calibration. This integration of experimental design and cognitive processing contributes to resolving theoretical ambiguity in dual-process research and opens avenues for predictive modeling of reasoning performance. By formalizing dual-process cognition through dynamic system analogies, this study contributes a continuous modeling approach to performance fluctuations under methodological asymmetry.

Keywords: dual-system theory; judgment and decision-making; experimental economics; rationality and bias; conceptual replication; Bayesian modeling (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2025
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