3. DUAL MODELS IN JUDGMENT AND DECISION MAKING... AND ALTERNATIVES

Question 1

Two types of analysis of JDM:

Answer 1

1. Negative (determinants): Assumes inferential competence and explains the discrepancies between normative principles and performance, as due to circumstantial obstacles
2. Positive (determinants): Aims to identify judgement and decision rules that could both explain successes and the normative principles violations

Question 2

Amos Tversky & Daniel Kahneman:

Rationality

Answer 2

The inherent limited rationality of humans and the high number of errors and biases identified, motivated them to perform positive analysis

• Only locally (vs. globally) rational (and in ideal conditions)
• Use (accessible) cognitive or contextual attributes (indirectly) correlated with critical attributes of the decision
• Optimization is never guaranteed
• Deviations from optimization are not idiosyncratic

Question 3

Critics to Tversky & Kahneman:

Answer 3

• Is a descriptive rather than explanatory approach to JDM
• Biases are not biases… because there is disagreement between statisticians about what is normative (and thus, deviations from it)
• Evolution privileged inferences rather than the learning of frequencies and probabilities
• Assumes that the conditions for rational models hold and can thus define optimal reasoning
• Only true for small world problems (e.g. gamble decisions) but not for large world problems (e.g. stock market crashes)

Question 4

Small world/ Large world:

Answer 4

• Small world: a situation in which all relevant alternatives, their consequences, and probabilities are known, and where the future is certain, so that the optimal solution to a problem can be determined
• Large world: a situation in which some relevant information is unknown or must be estimated from samples, and the future is uncertain, violating the conditions for rational decision theory

Question 5

Adaptive toolbox:

Answer 5

• the cognitive heuristics, their building blocks (e.g., rules for search, stopping, decision), and the core capacities (e.g., recognition memory) they exploit

Question 6

Ecological rationality:

Answer 6

• in which environments a given strategy is better than other strategies (better—not best—because in large worlds the optimal strategy is unknown)?

Question 7

Dual models in JDM:

Features of automatic and controlled processes:

Answer 7

• Automatic/ Type 1: Unintentional, efficient, uncontrollable, unconscious
• Controlled/ Type 2: Intentional, Inefficient, Controllable, Conscious

Question 8

Two Systems of processing:

Answer 8

• System 1: I like this colour

- System 2: Fuel, Costs, Repair,…

Question 9

Decision Making Heuristics: 3 different approaches

Answer 9

• Representativeness is an assessment of the degree of correspondence between a sample and a population, an instance and a category, an act and an actor, or more generally between an outcome and a model
• Availability is an assessment of the frequency of a class or the probability of an event based on the ease with which instances or occurrences can be brought to mind
• Adjustment and anchoring is an assessment by starting from initial value that is adjusted to yield the final answer
  o Different starting points yield different estimates, which are biased towards the initial values

Question 10

Heuristics: 4 different variations

Answer 10

• Recognition heuristic (Goldstein & Gigerenzer, 2002):
  o If one of two alternatives is recognized and the other is not, then infer that the recognized alternative has the higher value with respect to the criterion. E.g. brand names
  o If both alternatives are recognized but one is recognized faster, then infer that this alternative has the higher value with respect to the criterion E.g. brand names
• Fluency heuristic (Goldstein & Gigerenzer, 2002):
  o If both alternatives are recognized but one is recognized faster, then infer that this alternative has the higher value with respect to the criterion
• Take-the-first heuristic (Johnson & Raab, 2003):
  o When alternatives are not given but need to be generated from memory, i.e. sequentially retrieved rather than simultaneously perceived: Choose the first alternative that comes to mind
  o Experienced handball players saw video sequences from a game and asked what they would have done (e.g., pass the ball, take a shot): On average, the first option that came to mind was better than later options and when more time was given to inspect the situation
• Take-the-best heuristic (e.g. Brighton & Gigerenzer 2011):
  o Infer which of two alternatives has a higher value on a criterion (1) based on binary cue values retrieved from memory (0/1).