What insights about institutional design can be gained when the processing of information is not always under conscious control? It might seem that the very purpose of most institutional efforts to control decision making is to produce decisions that are conscious, slow, deliberative, effortful, rational, and unemotional. Institutional design would thus seem targeted to produce what psychologists refer to as “system 2” thinking. From this perspective, institutional interventions should drive out cognitive processes that are unconscious, rapid, automatic, associative, holistic, and emotional; that is, reduce it to “system 1” thinking. If there is reason to believe that system 1 processes will be at work, additional institutions would aim to bring cognition under conscious control, or at least limit the undesirable influence of system 1 thinking on decisions and behavior. This chapter demonstrates that institutional efforts to improve decision making are not solely directed at producing system 2 thinking. No cognitive process is superior in all settings. Thus, good institutional design should aim at the best match between cognitive processes and tasks. In appropriate contexts, this includes capitalizing on the power of intuition.
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