L14 - Heuristics and Biases that make us dumb

Question 1

What is Kahneman and Tversky’s ‘Heuristic’s and Biases’ Theory?

Answer 1

Humans rely on heuristics to make decisions, asses probabilities and make judgements, but sometimes they can mislead us.

Question 2

Define heuristics

Answer 2

Mental shortcuts that simplify judgements

Question 3

Define biases

Answer 3

Systematic deviations from rational/logical reasoning.

Question 4

What is the representativeness heuristic?

Answer 4

The more detailed a scenario, the more it is viewed as representative and likely to have occurred.

(In reality the more detailed the scenario less probable it occurred)

Question 5

What is the ‘belief in the law of small numbers’ heuristic?

Answer 5

People ignore outliers even in small number samples.

We believe chance is correcting when it is not.

Question 6

What is the conjunction fallacy?

Answer 6

People tend to choose the more descriptive option when given choosing the correct answer.

This is seen as illogical as there is less chance of being correct.

(e.g. Linda is a bank teller vs Linda is a feminist bank teller)

Question 7

What is ‘base rate neglect’ as defined by Kahneman and Tversky?

Answer 7

People tend to neglect what the actual probability of something happening is in a situation and tend to rely just on the reported information.

(e.g. blue v green taxi case)

Question 8

In what ways can you reduce ‘base rate neglect’?

Answer 8

1. Highlighting the base rate
2. Presenting probabilities as frequencies (e.g. out of 100 cabs, 85 are green 15 are blue)
3. Presenting scenarios before the base rate information

Question 9

What is the availability heuristic?

Answer 9

Using the ease or frequency with which information is brought to mind to infer the likelihood that an event will occur.

We overestimate things that are reported more (e.g. we think shark attacks kill more than bee stings when its the opposite)

Question 10

What are the two types of availability heuristic?

Answer 10

Recall availability

Scenario availability

Question 11

What is recall availability?

Answer 11

An event is judged more likely to the extent that instances or associations are easily recalled.

Question 12

What is scenario availability?

Answer 12

An event is judged more likely if it is easy to call to mind scenarios resulting in that events occurrence.

Question 13

What is Anchoring bias?

Answer 13

The number initially provided acts as an anchor for your estimates.

Question 14

What is ‘planning fallacy’?

Answer 14

We underestimate the time/cost of our plans because we cannot foresee everything that needs to be done

Question 15

What is the ‘bias blind spot’?

Answer 15

The tendency to view others as more susceptible to bias than ourselves.

Question 16

Why does the ‘bias blind spot’ occur?

Answer 16

We rely too much on conscious introspection to make inferences about processes that occur outside our awareness.

• We overemphasise our own experience and
• Ignore the influence of the environment on our own behaviour
• View others behaviour as being the result of cognitive shortcomings, rather than environment