Judgement and Decision-making Flashcards
What are today’s views on people making decisions (2)?
people make decisions based on heuristics
heuristics = simple shortcuts that help us make decisions that avoid heavy mental work
people are very prone to biases
What did Herbert Simon and Paul Meehl proposed
bounded rationality
humans are sometimes rational, not rational when there is cognitive limitations (attention, memory)
sacrificing
we use experience to shape our expectations, then we stop our search for solutions once the solution meets the expectation
clinicians are not accurate on making predictions, compared to prediction models such as the regression model
clinicians make predictions that sometimes omit the base rate, and overweighing the case rate
what is the availability heuristics by tversky and kahneman (definition, illusory correlations, why)
things that are more likely to recall are treated as more probable compared to things that are less likely to be recalled
experiment
more celebrities = the more the gender > as celebrities are more likely to be recalled > think there are more
illusory correlation
correlations that do not exist but people think they exist
reason > recalling a prior association between the characteristics and the illness > guiding the interpretation
why
because we don’t have the true probability therefore we use things in the memory to shape our probability
memory and recalling is limited
representativeness heuristics (definition, conjunction rule of probability, why)
we use resemblance instead of the base rate
base rate neglect: that we use resemblance instead of the actual base population
if the two events are independent, using resemblance is still irrational
conjunction rule of probability
we don’t have the true probability > therefore we use resemblance since it is a simpler cognitive process
What is the law of large numbers, and what is the anchoring theory
the larger the sample size is = the more representative the number is
anchoring theory
when we have to make unfamiliar guesses, we use similar things as an anchor to assist our guesses
even if the numbers are totally unrelated, people still tend to use the numbers as an anchor (UN experiment)
why? because we don’t know the true probability (recent numbers are stored in the stm, therefore being used as an anchor (recency effect))
what is the framing effect and the loss aversion effect (vs expected utility and the prospect theory)
framing effect
the way that the statement is framed = affect the decision made
if the statement is framed in losses = decision to make risk (risk taking)
since the perceived loss = twice as large as the gains(if negatively framed)
if the statement is positively framed = taking the safe option (risk aversion)
contrast with the expected utility theory
states that we make decisions to maximise the desired outcome
if the two outcomes are the same, the expected utility is the same
prospect theory
power function of psychological value and measurable experience
can be used to explain gains and losses
such that the loss is perceived to be more negative than the positive perception gained with the same amount
What are some of the critics that Kahneman and Tversky’s works faced?
there is no formal model
there is no theoretical explanation
sometimes heuristics are good
> recognition heuristics = making decisions based on things that we recognise
> fast and frugal heuristics
fast = little decision time
frugal = without computation and calculation (e.g., the tree-gram that doctors use for diagnose)
Explain the MINERVA-DM model
formal model of decision making
decisions are made based on the global similarities of the cues
if the similarities are high = relate
can explain availability, representativeness and overweighting of rare events
for instance, plane crash = more similar to death than car crash, therefore plane crash = death
