This descriptive qualitative study examines six eighth-grade students' thinking while solving probability problems. This study aimed to gather direct information on students' problem solving processes informed by the heuristics and biases framework. This study used purposive sampling (Patton, 1990) to identify eighth-grade students who were knowledgeable about probability and had reached the formal operational stage of cognitive development. These criterion were necessary to reduce the likelihood of students' merely guessing answers and important so that the researcher could distinguish between reasoning and intuition. The theoretical framework for this study was informed by Kahneman and Fredrick's (2002) recent revision to the heuristics and biases framework grounded in the research of Amos Tversky and Daniel Kahneman. Kahneman and Fredrick (2002) drew on dual process theory to explain systematic and predictable heuristic ways of thinking. Dual process theory hypothesizes that human thinking is divided into two different modes of processing. One mode, called System 1, is fast and linked to intuition, and the other, called System 2, is slow and linked to reasoning (Evans, 2008; Stanovich and West, 2000). Within dual process theory, System 1 thinking provides a credible system for explaining why people use heuristic thinking (Kahneman and Frederick, 2002). The recent revision to the heuristics and biases framework is focused on three heuristics, representativeness, conjunction fallacy, and availability. These three heuristics are believed to share the same mental process identified by Kahneman and Fredrick (2002), as the attribute substitution process. The clinical task based interview method was used in this study. This technique allowed the researcher to better observe and interact with the participants while exploring the students' probability thinking. The researcher also used think-aloud protocols to better reveal the organic thinking patterns of the students in real time (Ericsson and Simon, 1980; Fox, Ericsson, and Bets, 2010; Van Someren, Barnard, and Sandberg, 1994). The data from the interviews were analyzed using the constant comparison method (Glaser, 1965). This analysis revealed three categories that were combined with other analyses to create profiles for various thinking patterns observed by the researcher. The researcher identified patterns of thinking by students that were consistent with System 1 thinking and associated with the attribute substitution process (Kahneman and Fredrick, 2002). There were also situations in which students demonstrated ways of thinking consistent with System 2 thinking. However, unexpected ways of thinking were also identified by the researcher. For example, there were occasions when students substituted their fraction knowledge when solving probability problems and even seemed to equate probability with fractions. This type of thinking was referred to as the content substitution process in this study. This process occurred when students were using System 1 thinking as well as other types of thinking. In addition, the researcher observed students with thinking patterns that contained characteristics of both System 1 and System 2, which is referred to as slow intuition in this study. Slow intuition seemed to affect students' problem solving strategies as they wavered between multiple problem solving strategies that included either of the two substitution processes: attribute substitution and content substitution. This study contributes to the body of knowledge related to probabilistic thinking. In particular, this study informs our understanding of heuristic thinking used by eighth-grade students when solving probability problems. Further, teaching practices that draw on Fischbein's (1975, 1987) general notion of intuition might be developed and used to improve probability reasoning skills. These teaching practices target students that depend on the attribute substitution process and/or the content substitution process. Each of these heuristic ways of thinking may require different instructional techniques to help students develop more sound ways of thinking about probability. Regardless, teachers need to be informed of the extent that some students rely on their fraction knowledge when solving probability problems. / Ph. D.

Submitted by Gisele Isaura Hannickel (gisele.hannickel@fgv.br) on 2011-09-05T20:01:59Z No. of bitstreams: 1 Thesis finale version.pdf: 527455 bytes, checksum: 835e5bc14bf6752ff6f9c73158e3eb1a (MD5) / Approved for entry into archive by Gisele Isaura Hannickel (gisele.hannickel@fgv.br) on 2011-09-05T20:02:37Z (GMT) No. of bitstreams: 1 Thesis finale version.pdf: 527455 bytes, checksum: 835e5bc14bf6752ff6f9c73158e3eb1a (MD5) / Approved for entry into archive by Gisele Isaura Hannickel (gisele.hannickel@fgv.br) on 2011-09-05T20:03:00Z (GMT) No. of bitstreams: 1 Thesis finale version.pdf: 527455 bytes, checksum: 835e5bc14bf6752ff6f9c73158e3eb1a (MD5) / Made available in DSpace on 2011-09-06T10:57:20Z (GMT). No. of bitstreams: 1 Thesis finale version.pdf: 527455 bytes, checksum: 835e5bc14bf6752ff6f9c73158e3eb1a (MD5) Previous issue date: 2011-08-08 / Behavioral finance, or behavioral economics, consists of a theoretical field of research stating that consequent psychological and behavioral variables are involved in financial activities such as corporate finance and investment decisions (i.e. asset allocation, portfolio management and so on). This field has known an increasing interest from scholar and financial professionals since episodes of multiple speculative bubbles and financial crises. Indeed, practical incoherencies between economic events and traditional neoclassical financial theories had pushed more and more researchers to look for new and broader models and theories. The purpose of this work is to present the field of research, still ill-known by a vast majority. This work is thus a survey that introduces its origins and its main theories, while contrasting them with traditional finance theories still predominant nowadays. The main question guiding this work would be to see if this area of inquiry is able to provide better explanations for real life market phenomenon. For that purpose, the study will present some market anomalies unsolved by traditional theories, which have been recently addressed by behavioral finance researchers. In addition, it presents a practical application of portfolio management, comparing asset allocation under the traditional Markowitz’s approach to the Black-Litterman model, which incorporates some features of behavioral finance. / Finanças comportamentais, ou economia comportamental, consiste em um campo teórico que justifica que existe importantes variáveis psicológicas e comportamentais que estejam envolvidos em actividades financeiras, tais como decisões de finanças corporativas e de investimentos (alocação de ativos, gestão de portfólios e assim por diante). Este campo tem experimentado um crescente interesse de acadêmicos e profissionais da área financeira desde episódios de várias bolhas especulativas e crises financeiras. Na verdade, incoerências entre os eventos observados no mercado real e a teoria financeira tradicional estão levando mais e mais pesquisadores a olhar para modelos e teorias novos e mais abrangentes. O objetivo deste trabalho é fazer uma revisão do campo de finanças comportamentais, ainda pouco conhecido pela maioria das pessoas. Este trabalho apresentará as suas origens e suas principais teorias, contrastando-as com as teorias tradicionais de finanças. A principal questão que orienta o trabalho é identificar se esta área é capaz de fornecer melhores explicações para os fenômenos reais de mercado. Para esse efeito, o documento vai relatar algumas anomalias anomalias de mercado que não são explicadas pelas teorias tradicionais, que foram atualmente abordadas pelos estudiosos de finanças comportamentais. Além disso, o estudo faz uma aplicação prática para a atividade de gestão de carteiras, comparando a alocação de ativos resultante do modelo tradicional de Markowitz à obtida do modelo de Black e Litterman, que adiciona algumas questões de finanças comportamentais.